AKSHAY KSHIRSAGAR
Capital Gain in India with Tax Rate and Exemption
Advocate Akshay Kshirsagar, CA Priyanka Jain Updated 25th March 2022
WHAT IS CAPITAL GAIN
Capital gains fall into two categories:
For Equity oriented scheme –
Short-term capital gain are gain realized on assets that you’ve sold after holding them for less than one year.
Long-term capital gains which are realized on assets that you’ve sold after holding them for more than one year
For other than Equity oriented scheme –
Short-term capital gains are those realized gains on assets that you’ve sold after holding them for less than two years.
Long-term capital gains are realized on assets that you’ve sold after holding them for more than 2 year
Types of Capital Gain
Land and building, house property, vehicles, patents, trademarks, leasehold rights, machinery, paintings and jewellery are a few examples of capital assets. This includes having rights in or in relation to an Indian company. It also includes the rights of management or control or any other legal right. The following do not come under the category of capital asset:
a. Any stock, consumables or raw material, held for the purpose of business or profession
b. Personal goods such as clothes and furniture held for personal use
c. Agricultural land in rural India
d. Gold Bonds by Central Government
e. Special bearer bonds (1991)
f. Gold deposit bond issued under the gold deposit scheme (1999) or deposit certificates issued under the Gold Monetisation Scheme, 2015.
Classification of STCG and LTCG
1. STCG ( Short-term capital asset ) An asset held for a period of 24 months (w.e.f AY 19-20) or less is a short-term capital asset for immovable properties such as land, building and house property. However in respect of some assets like shares, bond, mutual funds which are equity oriented the period of holding shall be considered up to 12 months or less.
2. LTCG ( Long-term capital asset ) An asset that is held for more than 24 months is a long-term capital asset.
In case of long term in respect of some assets like shares, bond, mutual funds which are equity oriented the period of holding shall be considered more than 12 months.
Tax on Capital Gain
1. Debt Fund
a. Short Term gain is taxed as per slab rate.
b. Long Term gain is taxed at 20% after indexation.
2. Equity Fund
a. Short Term gain is taxed at 15%
b. Long Term gain is taxed at 10% after over and above 1 lakh
Calculation of Capital Gain
Sale Consideration – XXXX
Less : Expenses Incurred during sale – XXXX
Less : Indexed Cost of Acquisition – XXXX
Less : Indexed Cost of Expenditure – XXXX
Capital Gain – XXXX
Indexed Cost of Acquisition (COA) – It the cost of acquisition adjusted with the cost of inflation.
Index COA – COA x (indexed year of transfer/indexed cost of Aquisition).
Indexed Cost of Improvement (COI) – It the cost of improvement adjusted with the cost of inflation.
Index COI – COI x (indexed year of transfer/indexed cost of Acquisition)
Cost Inflation Index
