1. PRESENTED BY:-
Name :- Rutuja Devidas
Nimbalkar
Roll no :- 7831
Class :- M.com - 1
Sem :- First Semester.
CAPITAL GAIN
2. WHAT IS CAPITAL
GAIN??
Acapital gain is a profit that results from investments
into a capital assets, such as stocks,bonds or real estate,
which exceeds the purchase price.
It is the difference between a higher selling price and a
lower purchase price, resulting in a financial gain for the
investor.
4. CAPITAL
ASSETS
It means property of any kind held by an assesses
whether connected with his business, profession or not.
It may be moveable or immovable, tangible or
intangible, fixed or floating etc.
It includes such as goodwill, leasehold right, jewellery,
manufacturing license etc.
6. TRANSFER OF CAPITAL
ASSETS [SEc.2(47)]
Sale
Relinquishment of the assets
Exchange
Extinguishment of any right in an asset
Conversion of asset into sock-in-trade by the owner
Maturity or redemption of a zero coupon bond
7. COMPUTATION OF CAPITAL
GAIN [SEc.48(1)]
Short-term capital gain [sec.2(42B)]
STCG = Purchase V
alue - CurrentAsset V
alue
Long-term capital gain [sec.2(29)B]]
LTCG = Purchase Value - CurrentAsset Value
8. FORMAT OF
STCG:-
Sales consideration
Less:-selling expenses
Net sale consideration
Consideration
Less:-cost of acquisition
cost of improvement
Short-term Capital Gain
Less:- limited exemptions
Taxable STCG
9. FORMAT OF
LTCG:-
Sales consideration
Less:-selling expenses
Net sale consideration
Less:-indexed cost of acquisition
indexed cost of improvement
long term capital gain
Less:-All exemptions
Taxable LTCG
10. TAX ON CAPITAL
GAIN
Tax on short term capital gain
Tax on long term capital gain
11. TAX ON SHORT TERM
CAPITAL GAIN
It means transfer of shares on which security transaction tax has
been charged [sec111(A)]
Applicable to
• All assessee
Condition to be satisfied
• STCAbeing an equity share in a company or a unit of an equity
oriented fund.
• Transaction is chargeable to Security transaction tax.
Tax Rate
• STCG shall be taxed @15%+surcharge+education cess including
SHEC.
12. TAX ON LONG TERM CAPITAL
GAIN [SEc.112(1)]
It means share on which transaction tax has been
charged [sec.10(38)].
Applicable to
• All assesssee
Condition to be satisfied
• Any income arising from the transfer of a LTCA, being an equity share in
a company or a unit of an equity oriented fund.
• Transaction is chargeable to Security transaction tax.
Tax Rate
• LTCG arising on transfer of Zero coupon bonds shall be calculated
@10%+surcharge+education cess+SHEC without indexation.
13. EXEMPTION -
54
Section 54
Applicable
to
Individual or Huf
Conditions Assessee has transferred a long-term residential
house, income of which is taxable under the head of
Income From house property”.
It must acquire a new residential house within prescribed
time limit.
Time limit
for
acquisition
of new
assets
For purchase within a period of 1yr. before, or 2 year
after, the date
of transfer.
For construction with in a period of 3 years after the date
of transfer.
Deduction Investment in the new assets or Capital gain
Revocation
of
benefit
If the newly acquired residential house is transferred
with in 3 years from the date of acquisition of new
assets, then the benefit availed earlier shall be
revoked. Revoked income shall be reduced from cost of
acquisition of new assets.
14. EXEMPTION -
54B
Section 54 B
Applicable to Individual or Huf
Conditions Assessee must have transferred a capital asset being
an agriculture land. Agriculture land must have been
used by the individual or his parents for agriculture
purpose for at least 2 yr. prior to its transfer.
Time limit
for
acquisition
of new
assets
With in 2 years after the date of transfer.
Deduction Investment in the new assets or Capital gain.
Revocation
of
benefit
If the newly acquired residential house is transferred
with in 3 years from the date of acquisition of new
assets, then the benefit availed earlier shall be
revoked. Revoked income shall be reduced from cost of
acquisition of new assets.
15. EXEMPTION -
54EC
Section 54 EC
Applicable to All assessee
Conditions Assessee must have transferred any long-term capital
asset.
It acquires ‘long-term specified assets’.
Time limit for
acquisition
of
new assets
Within 6 months after the date of transfer.
Deduction Investment in the new assets or capital gain.
Revocation
of
benefit
Earlier benefit shall be revoked in such bond each
transferred or converted into money within 3 year of
its acquisition or a loan is taken security of the new
asset within the said period. Revoked income shall
be reduced from cost of acquisition of new assets.
16. EXEMPTION -
54F
Section 54F
Applicable Individual or Huf
Condition
s
Assessee must have transferred a long-term capital asset
other than a
residential house property. It must acquire a one
residential house within prescribed time limit. It
doesn’t purchase, within 2yrs, or construct, within
3yrs of transfer of the original asset
Time limit For purchase within a period of 1yr. before, or 2 year
after, the date of transfer.
For construction with in a period of 3 years after the date of
transfer.
Deduction Investment in the new assets*Capital gain/net sale
consideration
Capital gain [net sale consideration=sale consideration –
exp.on transfer
Revocatio
n
of benefit
If the newly acquired residential house is transferred with in
3 years
after the date of acquisition ,benefit availed earlier shall
be revoked. Another residential house is purchased by
the assessee within 2 yr. or constructed within 3
yrs.after the date of transfer of original asset.
17. QUESTIO
N:-
Mrs. Ritika acquired land on 1/4/77 for Rs.10,000. the fair
market value as on 1/4/81 was Rs. 12,500.As on 1/4/2008,
she sold such land for Rs. 1,40,000. Brokerage @1% of sale
value was paid by her.
Compute capital gain of Mrs. Ritika for theA.Y
. 2009-10.
CII- 2008-09=582
1981-82=100
18. SOLUTIO
N:-
Working notes:-
Expenses on transfer:-1% of Rs.1,40,000
Indexed cost of acquisition:-Rs.12,500*582/100
PARTICULARS DETAILS AMOUNT
Sale consideration 1,40,000
Less:-Expenses on transfer 1,400
Net sale consideration 1,38,600
Less:-indexed cost of acquisition 72,750
indexed cost of improvement NIL 72,750
LONG TERM CAPITAL GAIN (65,850)
