Capital Gain Investment

Invest to secure tomorrow.

Get Started
About Capital Gain Assets  Capital Gains Calculation Tax Exemptions Types of Capital Gain

What is Capital Gain ?

A capital gain is a rise in an asset's or investment's value as a result of the asset's or investment's price growth. In other terms, a gain happens when an asset's current or selling price surpasses its original purchase price. All kinds of capital assets, including but not restricted to stocks, bonds, goodwill, and real estate, are attributed with capital gains.

Assets 

The following are not included under capital assets 

Any inventory, supplies, or raw materials kept for professional or commercial purposes. Items retained for personal use, such as clothing or furnishings.

Any rural Indian region with agricultural land. The Central Government has provided gold incentives over the years, such as the 6.5% gold bonus from 1977, the 7% gold bonus from 1980, and the defence gold bonus from 1980.

Bonds with unique bearers that were released in 1991. Gold deposit bonds or deposit certificates issued under the Gold Monetization Scheme (2015) that were issued under the Gold Deposit Scheme (1999).

Capital Gains Calculation

The type of assets and the length of holding time affect how capital gains are calculated.

Full Value Consideration
  • It is the payment made by a seller in exchange for a capital asset.
Cost of Acquisition
  • The asset's worth at the time of acquisition by a seller is known as the cost of acquisition.
Cost of Improvement
  • The costs incurred by a seller to make any adjustments or additions to a capital asset are known as the cost of improvement.
Tax Exemptions on Capital Gains

The following sections allow for tax breaks on profits made from assets

Section 54

  • The capital gains made by selling a residential property are not subject to taxes if the proceeds are used to invest in the purchase of another home. Deductions, however, can only be made if the following requirements are met.
  • A second property must be acquired by a person within two years of the first one's sale or one year prior to ownership transfer.
  • The acquisition of a second property in the case of a property that is still being built should be finished no later than three years after the first property's ownership has been transferred.
  • Purchased property cannot be sold for three years after the date of purchase.
  • The newly purchased property must be situated in India.

Section 54F

  • When capital gains are generated from a long-term asset other than a residential property, Section 54F exemptions may be claimed. However, if you sell the new asset within three years after buying it or having it built, the exemption is no longer valid.
  • After receiving the capital, the acquisition of a new property must be made within two years. Additionally, construction must be finished three years from the date of sale.

Section 54EC

  • If the capital gains statements are produced for investments made into particular bonds using the proceeds from the sale of a property, individuals may be eligible for tax deductions under Section 54EC.
  • After three years from the date of sale, the invested amount can be redeemed, but the bonds cannot be sold during that time. With effect from the 2018–19 fiscal year, this time frame has been increased to five years. People are obligated to invest in these unique bonds within six months following the sale of a property.
  • With so many advantageous investing possibilities available on the market, earning capital gains is considerably more convenient. Additionally, if reinvested properly, tax on capital gains might be lowered, increasing savings.
Types of Capital Gain

Gains against investments can be broadly categorised into the following categories depending on how long they have been held

Short term capital gain
  • Short term capital gains are profits made from an asset that is sold within 36 months after purchase. For instance, a property will fall under short term capital gains if it is sold within 27 months of acquisition.
Long term capital gain
  • Long-term capital gains are the profit made from selling an asset that has been held for more than 36 months. A holding time for immovable property was changed to 24 months as of March 31, 2017. In the case of movable assets, such as jewellery, debt-oriented mutual funds, etc., it is not applicable.
Long term capital gain
  • A few assets are also regarded as short-term capital assets if their holding time is under a year. The following is a list of assets that are taken into account under the aforementioned rule:

footer-service

Start a Business

Business Liecense

GST

Income Tax

TOOLS

© 2022 Tech and Tax Planner Pvt. Ltd.   All Rights Reserved.

Developed By : Inventive Infosoft | Creative Consultant: Efox Technologies