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Income From Capital Gains: Presented To

This document discusses capital gains tax in India. It defines capital gains as income derived from the transfer of a capital asset that results in a profit. For an asset to be considered a capital asset, it must be a property held by the assessee, whether connected to their business or not. When an asset is transferred through sale, exchange, relinquishment of rights, compulsory acquisition, or conversion to stock, capital gains can be realized. Capital gains are classified as either short-term (held 36 months or less) or long-term. The document provides examples of capital assets and outlines the computation of capital gains tax, including the indexed cost of acquisition. It concludes with an example problem calculating capital gains tax owed on the

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38 views13 pages

Income From Capital Gains: Presented To

This document discusses capital gains tax in India. It defines capital gains as income derived from the transfer of a capital asset that results in a profit. For an asset to be considered a capital asset, it must be a property held by the assessee, whether connected to their business or not. When an asset is transferred through sale, exchange, relinquishment of rights, compulsory acquisition, or conversion to stock, capital gains can be realized. Capital gains are classified as either short-term (held 36 months or less) or long-term. The document provides examples of capital assets and outlines the computation of capital gains tax, including the indexed cost of acquisition. It concludes with an example problem calculating capital gains tax owed on the

Uploaded by

shashikumar
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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TAX ASPECTS OF BUSINESS

INCOME FROM CAPITAL


GAINS
Presented To
Prof. Ramya madam

Presented By
Name

Roll No.

SHASHIKUMAR P
1DY14MBA27

Capital Gain

Any Income derived from a Capital asset movable or


immovable is taxable under the head Capital Gains
underIncome Tax Act 1961.

Basis of Charge

Profit or gain arising from the transfer of capital


assets during previous year is chargeable under the
head capital gains if following conditions are full filed;

Their should be capital Assets.

Their should be transfer of capital assets.

Transfer should take place in previous year.

Their should be profit or gains.

There must be a Capital


Asset [S.2(14)]

Capital assets is defined to mean propety of any kind,


held by the assesse, whether or not connected with his
business or profession.

Property may be tangible or intangible.

Land, buildings, vehicles, goodwill, tenancy rights,


leasehold rights, licences, patents, trademarks, etc.
are some examples of capital assets

Capital Assets must be


transferred [S.2(47)]

The sale, exchange or relinquishment of the asset;

The extinguishment of any rights therein;

The compulsory acquisition of any capital assets by


the government;

Conversion of capital assets into stock in trade.

Types of Capital
Assets
There are two types of capital assets;

Short Term Capital Gains: It means a capital assets held


by an assesse for not more than 36 months
immediately prior to its date of transfer. Tax is
calculated as per Income Tax Act.

Long Term Capital Gains : A Asset is not a short term


capital gain is long term capital gain. 20 % is taxable.

Computation of STCG

Full value of Consideration

XXX

Less: Cost of acquisition

XXX

Less: Cost of improvement

XXX

Short Term Capital Gain

XXX

Less: Exemption U/S 52(B), 54(D) & 54(G)

XXX

Net Short Term Capital Gain

XXX

Computation of LTCG
Full value of Consideration

XXX

Less: Cost of acquisition

XXX

Less: Cost of improvement

XXX

Short Term Capital Gain


Less: Exemption U/S 54 54(H)
Net Short Term Capital Gain

XXX
XXX
XXX

Meaning

Full Value Consideration : It means what the transferor


or is entitled to receive as consideration for the sale of
property/Asset. This Value may be in cash or in kind
i.e. in exchange for an asset.

Cost of Acquisition : It is the price which the assesse


has paid or the amount which the assesse has
incurred for acquiring the property/Asset.

Cost of Improvement : It is capital expenditure


incurred by am assesse in making any
addition/Improvements to the capital asset.

Indexed Cost of Acquisition


ICOA : Cost of Acquisition*Cost of the year in which
asset is transferred.
Cost inflation index of the first year in which asset was
first hold by the assesse or Cost inflation index of the
year beginning on 1st april,1981.(which Every is later)

Indexed cost of Investment 1


0
ICOI : Cost of Acquisition* Cost Inflation Index of the year
in which asset is transferred.
Cost inflation index of the year in which improvement
took place.

Sum

1
1

X Transfers Gold on 10th May, 2011 Rs 3655000.

Expenses on Trasfer Rs 55000.

Gold purchased on 23rd June, 1982 Rs 3 Lakhs to get


benefit u/s 54(F).

X Purchases house property on 12th May, 2011 Rs 27


Lakhs at pune.

Mr X Transfers pune property on 29th June, 2013 For Rs


30 Lakhs.

Find out Capital gain chargeable to tax. Cost of


investment for period 1982 is 109 & 2011-12 is 785.

Solution

1
2

Sales Consideration 3655000.0


Less: Expenses

55000.0

3600000.0
Less: Index Cost Of Acquisition
1982 & 2011-12 is 109 & 785 respectively
(300000*785/109) 2160550.0
1439450.0
Less: Exemption U/S 54(F)
(2700000/3600000*1439450)
Income Under head Capital Gain

1079587.5
359862.5

THANK YOU

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