Income from profits and gains from Business or Profession.
Income from Capital Gains.
Income from Other Sources.
7
What is Capital Asset?
191
6
Capital assets can be any fixed asset owned for personal or investment purposes. It can be tangible or intangible. For Example Land, Building, Shares, Mutual Funds, bonds, Debenture, Gold, Antiques, etc.
6
How many types of Capital Assets are there?
177
5
There are two types of capital assets based on the holding period. Short Term Capital Asset & Long Term Capital.
5
What are the eligibility criteria for different types of capital assets, qualifying for long term or short term?
167
4
Asset Type
Short Term
Long Term
Shares listed on Exchange, Equity Mutual Fund.
Less than 12 months.
12 months or more.
Unlisted Shares, Land, Building.
Less than 24 months.
24 months or more.
Bonds, Debentures, Precious Metals such as Gold, Antiques, etc.
Less than 36 months.
36 months or more.
4
What is Capital Gain?
178
4
Profit or gain arising from the sale of a capital asset is called Capital Gain.
4
What is the Indexed cost of acquisition?
159
4
Indexed cost means the inflated cost of acquisition which is derived from increased inflation index factors known as cost inflation index (CII) numbers.
Indexed cost of acquisition
= Cost of acquisition X (CII of the year of transfer / CII of the year of acquisition)
4
What is the Indexed cost of improvement?
146
4
Indexed cost of improvement meant inflated improvement cost which is derived from increased inflation index factors known as cost inflation index (CII) numbers.
Indexed cost of improvement
= Cost of improvement X (CII of the year of transfer / CII of the year of acquisition)
4
How to compute long term capital gain of assets other than Shares listed on Exchange, Equity Mutual Fund?
148
0
Long-term capital gain = Final Sale Price – (indexed cost of acquisition + indexed cost of improvement + cost of transfer)
0
What is Grand Fathering?
157
4
If the Cost of Acquisition of any shares or equity-oriented mutual fund acquired before 31st Jan’18 is below the fair market value of 31st Jan’18, then fair market value will be treated as the cost of acquisition.
On the other hand, if the selling price is less than the fair market value, then the selling price or the actual price of acquisition whichever is higher will be considered to be the cost of acquisition.
4
How fair market value is determined?
150
4
In the case of listed shares, the fair market value (FMV) would be the highest price quoted on the recognized stock exchange on 31st Jan 2018. If there was no trading on that day then the highest price quoted on the date preceding 31st Jan 2018, on which it was traded will be considered.
For equity-oriented mutual funds, it will be closing NAV on 31st Jan 2018.
4
How to compute the long term capital gain of Shares listed on the Exchange, Equity Mutual Fund?
139
1
If purchased before 31st Jan 2018 then the actual price or FMV whichever is higher will be considered as the cost of acquisition. We have to subtract the same from the sale consideration. And if purchased after 31st Jan 2018 then the actual price gets deducted from sale consideration for computing long term capital gain. You need to hold the securities for 12 months for qualifying Long term.
1
What is the long term & short term taxation rate of various assets?
147
5
Asset Type
Long Term Tax Rate
Holding Period
Short Term Tax Rate
Holding Period
Listed Equity Shares or Equity oriented Mutual Funds,
Whether TDS is deducted at source in case of Capital Gains?
150
3
In the case of the Resident Individual, no TDS is deducted at the source. NRI investors need to pay TDS at the highest marginal rate.
3
What will be the cost of acquisition of bonus shares or units acquired before 1st Feb 2018?
133
3
Fair Market Value of bonus shares or units as of 31st Jan 2018 will be considered the cost of acquisition.
3
If my total income including both types of capital gain doesn’t cross Rs2.5 lakh, then shall I have to pay taxes?
143
0
No. You need not pay any tax if your total income including capital gain doesn’t cross the basic exemption limit of Rs 2.5 lakh.
0
Can I claim a rebate under Sec 87A for long term capital gain?
138
4
No. Rebate under Section 87A cannot be adjusted against tax on long-term capital gains.
4
Can I claim a deduction Under Chapter VIA of Income tax against long term capital gain?
137
3
No deductions shall be allowed from Sec 80C to 80U in respect of long term capital gain.
3
List of exempted Capital Gains
153
4
Entire Capital Gain becomes Tax-free in certain conditions. Here are a few examples.
Section
Asset Transferred
Eligible
Investment of
Condition
Sale of New Asset
54
Residential House
Individual or HUF
Capital Gains
Investment of LTCG into a new residential House within one year before or after 2 years of the transfer. 3 years in case of construction.
If sold within 3 years entire capital gain becomes taxable.
54C
Immovable Property
Individual or HUF
Capital Gains
Investment of LTCG into certain bonds within 6 months of the transfer. The maximum exemption is Rs 50 Lakh.
Sec 54ec Capital Gain Bonds come with 5 years lock-in.
54EE
Any long term capital asset
Any assessee.
Capital Gains
Units of notified fund.
Entire capital gain becomes taxable if the assessee sells, transfers, or avails loan or advance on the security
54F
Any asset other than a residential house.
Any assessee.
Net consideration
One residential house in India
If sold within 3 year's entire capital gain becomes taxable.
54GB
Resendential Property
Individual or HUF.
Net consideration
Equity Shares of an eligible company. The company has to, within one year from the date of subscription in equity shares by the assessee, utilise the amount for the purchase of a new asset
If the newly acquired asset is sold within 5 years (3 years in case of computer or computer software acquired by an eligible startup) from date of acquisition, the exemption will be withdrawn and entire capital gain becomes taxable.
4
What is the limit for capital gain exemption?
143
1
Residential Indians between 60 to 80 years of age will be exempted from long-term capital gains tax if their income doesn’t exceed Rs. 3,00,000 per annum and above 80 years is Rs 5,00,000. The exempted limit for individuals younger than 60 years is Rs. 2,50,000 every year provided that the aggregate of all heads of income tax doesn’t cross the threshold limit.
1
Is Jewelry for personal use a capital asset?
144
1
Jewellery made of Gold, Silver, Platinum, or any precious metal or alloy, may or may not contain any precious stone, and held for personal use is also considered a capital asset. Any profit and gains arising from the sale or transfer of such jewelry are considered capital gains.
1
SAVE OUTPUT
Renewal Alert
Your membership has expired , kindly renew now
Upgrade Alert
Your Free Trial is expiring on . Kindly upgrade your Membership Now.
Renewal Alert
Your membership is expiring on 01-01-1970. Kindly renew today to avail % discount
Expired Alert
Your Free Trial has expired. Kindly upgrade your Membership Now