Capital Gain Tax filing. Easy guide for FY 19-20 & Onwards
Capital Gain Tax filing – A capital asset sold at a higher price than its cost of acquisition, the difference outcome is capital gain. Various types of capital assets are land, house property, equities & mutual funds, plant and machinery, buildings, patents etc. The capital gain is further classified into short-term capital gain (STCG) and long-term capital gain (LTCG). Whether a gain will be STCG or LTCG will depend on the period of holding and type of asset. The tax rates differ for LTCG and STCG. This article will help readers to understanding in dept capital gain taxation.
For Capital Gain Tax filing refer link >> https://www.incometax.gov.in/iec/foportal/
Relevant ITR form in case of Capital Gain Tax filing are :
- ITR – 2 https://www.taxledgeradvisor.com/itr-2/
- ITR – 3 https://www.taxledgeradvisor.com/itr-3/
- ITR – 4 https://www.taxledgeradvisor.com/itr-4/
What is Capital Gains Tax filing?
Transfer of Capital asset will result in profit or gain which will chargeable in head “Capital Gain” and will be the income of the year of transfer.
Following transactions will be deemed to be chargeable in head “Capital Gain” and will be the income of the year of transfer.
- Money/asset received from insurance company when capital asset was either damaged or destructed as a result of natural calamities, riots or civil disturbance.
- Conversion of capital asset into stock in trade.
- Sum received under life insurance policy if it is exempted from benefit of Section 10 clause 10D.
- Transfer made by depository or participant of beneficial interest of securities.
- Transfer of capital assets by person to his/her firm/AOP/BOI (not being company of co-operative society).
- Receipt of capital asset or money from specified entity in connection with reconstitution (Merger/demerger/amalgamation) of such entity.
- Transfer of capital asset due to compulsory acquisition.
- Transfer of land under specified agreement by individual or HUF (Taxable in the year of receipt of completion certificate from relevant authority).
- Difference of repurchase price and investment amount in case of equity linked savings scheme of which deduction taken u/s 80CCB(1).
What is Capital Asset under Capital Gain Tax Filing ?
Section 2 of Income Tax Act, 1962 has defined capital asset which means:
- Property of all kind whether related to business or not
- Securities held by foreign institutional investors
- Also jewelry, paintings, drawings, archeological collection, art, painting or sculptures.
The following do not come under the category of capital asset:
- Stock in trade, consumable or stores or raw material held for business or profession
- Personal effects such as movable property for personal use excluding jewellery, paintings, drawings, archeological collection, art, painting or sculptures.
- Rural agriculture land in India
- 6½% gold bonds,1977 or 7% gold bonds,1980 or National Defense gold bonds, 1980 issued by the central government
- Special bearer bonds,1991
- Gold deposit bond issued under the gold deposit scheme, 1999 or deposit certificates issued under the Gold Monetization Scheme, 2015.
Types of Capital Gains under Capital Gain Tax Filing
Following are the two types of capital gain:
- STCG – If period of holding is less than 36 months, it is STCG for all the capital assets. Exception of holding period for Short term capital gain are as follows:
- in case of listed equities, units of equity mutual funds or hybrid equity oriented mutual funds, units of UTI, Equity oriented funds or zero-coupon bonds, if period of holding is less than 12 months, it is STCG.
- in case of unlisted equities, immovable properties (land or building), if period of holding is less than 24 months, it is STCG.
- LTCG – If period of holding is more than or equal to 36 months, it is LTCG for all the capital assets. Exception of holding period for Long term capital gain are as follows:
- in case of listed or unlisted equities, units of equity mutual funds or hybrid equity oriented mutual funds, units of UTI, Equity oriented funds or zero-coupon bonds, if period of holding is more than or equal to 12 months, it is LTCG.
- in case of unlisted equities, immovable properties (land or building), if period of holding is more than or equal to 24 months, it is LTCG.
What is Capital Gain Tax rate under Capital Gain Tax Filing ?
| Gain Type | Type of Capital Asset | Capital Gain Tax Rate |
|---|---|---|
| LTCG | listed or unlisted equities, units of equity mutual funds or hybrid equity oriented mutual funds, units of UTI, Equity oriented funds or zero-coupon bonds | 10% over and above Rs 100,000 Long term Capital Gain. *No indexation benefit in case of shares |
| LTCG | Debt Funds or hybrid Debt oriented mutual funds | 20% *With Indexation benefit available |
| LTCG | Other than above | 20% *With Indexation benefit available |
| STCG | listed or unlisted equities, units of equity mutual funds or hybrid equity oriented mutual funds, units of UTI, Equity oriented funds or zero-coupon bonds & Securities Transaction Tax (STT) Paid | 15% *No Indexation benefit available |
| STCG | listed or unlisted equities, units of equity mutual funds or hybrid equity oriented mutual funds, units of UTI, Equity oriented funds or zero-coupon bonds & Securities Transaction Tax (STT) not Paid | Taxed as per applicable slab rate. *No Indexation benefit available For slab rates refer: https://www.taxledgeradvisor.com/business-tax-filling/ |
| STCG | Debt Funds or hybrid Debt oriented mutual funds | Taxed as per applicable slab rate. *No Indexation benefit available For slab rates refer: https://www.taxledgeradvisor.com/business-tax-filling/ |
| STCG | Other than above | Taxed as per applicable slab rate. *No Indexation benefit available For slab rates refer: https://www.taxledgeradvisor.com/business-tax-filling/ |
How to Calculate Short term Capital Gains Tax under Capital Gain Tax Filing?
Sales Consideration
Less: Cost of Acquisition
Less: Cost of Improvement
Less: Transfer Expenses
Short Term Capital Gain/ (Loss)
How to Calculate Long term Capital Gains Tax – under Capital Gain Tax Filing?
Sales Consideration
Less: Indexed Cost of Acquisition
Less: Indexed Cost of Improvement
Less: Transfer Expenses
Long Term Capital Gain/ (Loss)
Need Expert Assistance for Capital Gain Tax filing
For expert assistance on Capital Gain Tax filing in Udaipur and Rajasthan, reach our professionals at Tax Ledger Advisor.