Profits or gains arising from transfer of a capital asset are called “Capital Gains” and are charged to tax under the head "Capital Gains". Income from capital gains is classified as "Short Term Capital Gains" and "Long Term Capital Gains".
Capital Asset defined as
In respect of certain assets like shares (equity or preference) which are listed in a recognised stock exchange in India (listing of shares is not mandatory if transfer of such shares took place on or before July 10, 2014), units of equity oriented mutual funds, listed securities like debentures and Government securities, Units of UTI and Zero Coupon Bonds, the period of holding to be considered is 12 months instead of 36 months.
Period of holding to be considered as 24 months instead of 36 months in case of unlisted shares of a company or an immovable property being land or building or both.
Any other capital asset held by the taxpayer for a period of not more than 36 months immediately preceding the date of its transfer will be treated as short-term capital asset.
|Full value of consideration (i.e., Sales consideration of asset)||XXXXX|
|Less: Expenditure incurred wholly and exclusively in connection with transfer of capital asset (E.g., brokerage, commission, etc.)||(XXXXX)|
|Net sale consideration||XXXXX|
|Less: Indexed cost of acquisition (i.e. Purchased cost of asset with indexation )||(XXXXX)|
|Less: Indexed cost of improvement, if any (*)||(XXXXX)|
|Exemptions provided under sections 54, 54EC, 54F, and 54B||-|
|Long-Term Capital Gain||XXXXX|
Indexation is the process that takes into account inflation from the time taxpayer bought the asset to the time taxpayer sell it. The way it works is that it allows taxpayer to inflate the purchase price of the asset to take into account the impact of inflation. The end result is that you get the benefit of lowering your tax liability.
|Sl. No.||Financial Year||Cost Inflation Index|
All the above allowances can be understood by their names but yet there are some allowances, which needs an explanation.
Re-Inestment Options: While taking the tax consultation from EZTax.in expert would be beneficial, below are options available to do re-investment to avoid / reduce the capital gains tax
Important: How long we can keep the Capital Gain in Capital Gains Deposit Account Scheme (aka CGAS Scheme)?
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