1. DISCOVER . LEARN . EMPOWER
UNIVERSITY INSTITUTE OF LEGAL STUDIES
SUBJECT : Principles of Taxation Laws
Topic: Income under the head of Capital Gains
2. 2
COURSE OUTCOME
Co
Number
Title Level
Co 1 The students will be able to exhibit sophisticated
knowledge related to tax accounting rules and
regulations
Understanding
Co 2 The students will be able analyze and resolve tax
problems
Analyzing
Co 3 The students will be able to identify and define with the
rules of tax, penalty and prosecution in case of default
Understanding
Co 4 The students will be able to understand the concept of
direct and indirect taxes, agricultural income and
incomes exempted from taxes
Understanding
3. ESSENTIALS
(Section-45)
Basis of Charge
There should
be a capital
asset
Capital asset
should be
transferred by
the assessee
Such transfer
must take
place during
the previous
year
Any profit or
gain must
arise from
such transfer
Such profit or
gain must not
be exempted
under Section-
54=54GA
3
4. CAPITALASSET
• Section-2(14) of the Income Tax Act, 1961 states "capital asset" means—
(a) property of any kind held by an assessee, whether or not connected with his business or profession;
(b) any securities held by a Foreign Institutional Investor which has invested in such securities in accordance
with the regulations made under the Securities and Exchange Board of India Act, 1992 (15 of 1992)
• Exceptions:
4
Any stock in trade,
consumable store or raw
material held for the purpose
of business or profession
Personal effects of an
assessee (movable property
of any kind)
Agricultural Land in rural
areas in India
6.5% Gold Bonds, 1977 or 7%
Gold Bonds. 1980 or National
Defence Gold Bonds, 1980
issued by Central Govt.
Special Bearer Bonds, 1991
Gold Deposit Bonds, issued
under Gold Deposit Scheme,
1999 or deposit certificates
issued under the Gold
Monetisation Scheme, 2015
5. EXCEPTIONS TO EXCEPTIONS
(Capital Assets)
Immovable Property
Work of art,
drawing, paintings,
sculptures and
archaeological
collections
Jewellery and
Precious Stones
Agricultural Land in
urban area in India
Agricultural Land
outside India
5
6. Types of Capital
Assets
Short Term Capital
Assets (Sec-2(42A))
Any capital asset held
by the assessee for
max. 36 months
before transfer
Long Term Capital
Assets (Sec-2(29A))
Any capital asset held
by the assessee for
more than 36 months
before transfer
6
7. Short Term Capital
Assets held for 12
months and less
Shares of a
company
Listed Securities
(Debentures or
Government
securities)
Units of UTI Units of Equity
Oriented Funds Zero Coupon Bonds
7
9. COMPUTATION OF SHORT-TERM
CAPITAL GAIN (Section-48)
• Short Term Capital Gain = Full value of consideration received or
receivable –
1. Cost of Acquisition
2. Cost of Improvement
3.Any Expenditure wholly and
exclusively for the transfer of asset
9
10. COMPUTATION OF LONG-TERM
CAPITAL GAIN (Section-48)
• Long Term Capital Gain = Full value of consideration received or
receivable –
1. Indexed Cost of Acquisition
2. Indexed Cost of Improvement
3.Any Expenditure wholly and
exclusively for the transfer of asset
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