2. • The two basic ingredients are that there
should be a
• ‘capital asset’ owned by the assessee, and
• such asset should have been ‘transferred’
during the previous year.
3. What is a capital asset
• The Act gives a wide definition to the
expression ‘capital asset’ to the effect that
it will mean ‘property of any kind held by
an assessee, whether or not connected
with his business or profession’.
4. Items excluded
• Any stock-in-trade, consumable stores or raw
materials held for the purpose of the assessee’s
business or profession.
• Personal effects, i.e., movable property
(including wearing apparel and furniture, but
excluding jewellery) held for personal use by the
assessee or any member of his family
dependent on him.
• A motorcar or any other vehicle held for
personal use can be brought under this
category.
5. With effect from the assessment year 2008-09, personal
effects exclude, in addition to jewellery,
• Archaeological collections
• drawings,
• paintings,
• sculptures, or
• any work of art.
• Consequently, from the assessment year 2008-
09 onwards capital gains on the transfer of these
items will also be liable to tax.
6. • Agricultural lands situated in India other
than lands situated in urban areas.
• Certain Gold Bonds (which have already
matured).
• Special Bearer Bonds, 1991.
• Gold Deposit Bonds issued under the Gold
Deposit Scheme, 1999.
7. Assets Whether
capital asset
or not
Reason
Good will of business
Property held by a dealer in
property
Residential house for personal
use
Gold held by jeweller
Loose diamonds
Gold watch for personal use
Lease hold rights in land
8. Assets Whether
capital asset
or not
Reason
Personal car
Investments in shares of Reliance
ltd
Refrigerator used in house
Gold coins used for puja of
Goddess Laxmi, in puja room in
the house
Silver utensils used in the kitchen
Agricultural land situated in
Afganistan
9.
10. Important concepts
• Short term capital asset.
• long term capital asset.
• Expenditure on transfer
• Cost of acquisition
• Cost of improvement
• Indexed cost of acquisition & improvement
• Fair market value
11. • If the holding period of asset i.e time
between sale and purchase of the asset
is more than 2 years for property and
more than 3 years for unlisted shares,
gold, and debt funds then one uses
Cost of Inflation Index for calculating
Long Term Capital Gains (LTCG) to
reduce the tax.
12. Format for Short term Gains
Particulars
Sales consideration
Less-
Cost of purchase
Cost of improvement
Transfer expenses
13. Format for Long term Gains
Particulars
Sales consideration
Less-
Indexed Cost of purchase
Indexed Cost of improvement
Transfer expenses
14. • Indexed cost of acquisition = cost of
acquisition x CII for the year of tranfer
CII for the year of acquisition
• Indexed cost of improvement= cost of
improvement x CII for the year of tranfer
CII for the year of improvement
16. Determine the amt of taxable gains in
respect of the following transaction:
• M sells a residential house property in
Nashik for Rs 46,30,000 on 23rd April 2017
which was purchased by him on april 20,
2003 for Rs 2,90,000.
• He build separate room cost of which was
39000 on 2006-07.
• And he paid Rs 2,000 as commission to
the broker
17. • Mr. Raghu Ram Rajesh purchased a house property for
Rs.7,00,000 in the year 1995-96. Following expenses
were incurred for the house property.
• Cost of Construction in the year 1997-98 Rs. 1,50,000.
• Cost of Construction of 1st floor in 2003-04 Rs.3,50,000
• Alteration to house property in 2010-11 Rs.3,00,000.
• Fair Market Value of the property on 1st April Is
Rs.15,00,000. The house property is sold to Mr. Alok in
the previous year 2021-22 for Rs.2,10,10,000.
• Expenses incurred on transfer during the previous year
is Rs.15,000.
