Capital Gains in Taxes

Capital Gains in Taxes in India[edit]

  • Capital gains arise when a property or shares/ mutual fund units/bonds etc., are sold for a profit.
  • It means profit or gains arising from the sale or transfer of a capital asset.
  • Treatment of capital gains is slightly different from that of other sources of income as mentioned in the previous pages.
  • It mainly depends upon whether the capital gain is SHORT TERM or LONG TERM.
  • Capital gain is considering being SHORT TERM if immovable property is sold/ transferred within three years of acquiring it.
  • Similarly, if shares or other financial securities such as mutual fund units are sold within one year of purchase the profit earned is treated as SHORT TERM CAPITAL GAIN.

SHORT TERM CAPITAL GAIN

  • Capital gain is considered to be short term if immovable property is sold/ transferred within three years of acquiring he same.
  • Similarly if shares or other financial securities such as mutual fund units are sold within one year of purchase, the profit earned is treated as SHORT TERM CAPITAL GAINS.
  • From the sale of shares or units of equity oriented mutual fund schemes, the short term capital gains are taxed at a flat rate of 10%, irrespective of the tax slab on other sources of income, provided securities transaction tax is paid on such sale.

LONG TERM CAPITAL GAIN

  • If immovable property is sold after three years of purchase, or financial securities such as shares, deep discount bonds units of open ended or close ended schemes of mutual funds, including UTI, are disposed of either by selling, transferring or by rendering after holding the same for more than 12 months, then the gain is considered to be long term capital gain.

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