Income Tax and CAPITAL GAINS..

Income Tax and CAPITAL GAINS..  

Profits and gains arising from transfer of a capital asset (Property, Stocks, Mutual Funds, Gold, Silver etc) are chargeable to income tax under the head, Capital Gains (Sections 45 to 55A)*.

Capital gains can be divided in 2 categories i.e. short term and long term depending upon period of holding the asset.

Short term capital gain is taxable like an ordinary income in the case of all assesses.

However, long term capital gain gets a special treatment. It is computed by, deducting indexed cost of acquisition and indexed cost of improvement' from net consideration since A.Y. 1993-94.

It is taxable at a special rate of 20%. An assessee can avail exemption under section 54, 54 B, 54D, 54EC, 54ED, 54F, 54G, 54GA and 54H on fulfilment of certain conditions.


*Note:  special treatment of capital gains arising from transfer of securities is given under the promoting capital market heading.
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