Things to Know about Capital Gains | Fusion - WeRIndia

If you sell any assets like property, shares, gold or jewellery, you have to pay capital gain tax on the profit arising from such sale of assets. The amount gained is taxable in the financial year in which the transaction takes place.

Capital Gain tax on an asset depends on the holding period of capital assets, like movable and immovable property, shares, mutual funds etc. The holding period is different for various capital assets.

It is calculated and disclosed in the income tax returns under the head ‘Capital Gains’. If an asset is sold within a specific holding period, it is called a short-term capital gain.

In the case of a property, the holding period is 24 months. If you sell a house within 24 months from its acquisition, the profit arising from the transaction is treated as a short-term capital gain.

If listed shares and equity-oriented mutual funds are sold within a year, short-term capital gain tax has to be paid on the profit. The holding period for debt-oriented mutual funds and gold or jewellery is three years. Otherwise, short-term capital gain tax has to be paid.

Short-term capital gains are taxable as per the income tax slab rates. On the other hand, the long-term capital gain tax rate is 20.8% with indexation for an immovable property like a house, gold and debt-oriented mutual funds.

The short-term capital gain tax rate is 15.60% on listed shares and equity-oriented mutual funds. And the long-term capital gain tax is 10% without indexation if the profit exceeds ₹1 lakh. However, there is no long-term capital gain tax on an amount up to ₹1 lakh, i.e. tax is exempt.

But, the shares must be listed on the Indian stock exchange and sold through it only. The tax is calculated as per the income tax slab rates on the sale of unlisted shares.

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