1. Capital gains tax is levied on profits from the sale of capital assets such as property, stocks, or other assets held for over a year. There are two types of capital gains: short-term gains taxed at ordinary income rates and long-term gains taxed at lower capital gains rates. 2. Some key exemptions from capital gains tax include reinvesting proceeds from selling a primary residence into another home under Section 54, reinvesting into specified infrastructure bonds under Section 54EC, and selling agricultural land and reinvesting into similar land under Section 54B. 3. Income from other sources includes various types of passive income like dividends, interest, rental income, lottery winnings,

1. UNIT-4
CAPITAL GAINS (Sec 45)
MEANING:-
Any gain arising from the transfer of capital assets during the previous year is
chargeable to tax under this head, after providing for exemption under section 54 to
54GB.
BASIC CONDITIONS:
1. Assessee should have a Capital Asset.
2. The Capital Asset should have been Transferred.
3. The transfer should have been made in During The Financial Year.
4. While transfer capital assets should have any Gain Or Profit.
5. Some Exemption should made U/S 54, 54B, 54D, 54EC, 54F, 54G & 54GA.
CAPITAL ASSETS :-(Sec.2 14)
It includes any kind of assets .It May movable or immovable, tangible or
intangible, Fixed or Current Assets.
Include, u/s 2(14)
a) Any rights in or in relation to an Indian company (Control, rights of
management).
b) Property of any kind.
c) Security held by a foreign institutional investor invested in accordance with rules
of SEBI Act.
Exclude,
a) Stock in trade-Business Assets (Raw materials, Work-in Progress, Finished goods)

2. b) Personal movable assets-(Other than Jewelry, Drawings, Art).
c) Gold, Bonds and Special Bearer Bonds.
d) Rural Agri. land (Situated 8kms away from municipality population is >10lakhs.).
TYPES OF CAPITALASSETS:
Capital Assets
SHORT TEAM Sec. 2(42A) LONG TEAM
Sec. 2(42A)
1.Financial Assets 2.Non-Financial Assets 1.Financial Assets 2.Non-
Financial Assets
Held less than Held less then Held more than Held more than
12 months 36 months 12 months 36
month
(1year)(Securities) (3years) (1year) (Securities)
(3years)
FINANCIAL ASSETS V/S NON-FINANCIAL ASSETS:-
Financial Assets Non-Financial Assets
1)Shares
Listed(12 months)
Unlisted (36 months).
2) Bonds.
1)Other than Financial
Assets(House, Land, Building,Plot)

3. 3) Debentures.
4) Government securities.
5) Zero coupon.
TYPES OF CAPITALGAIN:-
Short Term Capital Gain Long-Term Capital Gain
1)Any gain arisingfrom transfer of
short term capital assets
1)Any gain arisingfrom transfer of
long term capital assets
2)No need to calculate CII 2)Must calculate CII
3)Short term capital loss set off
againstshortterm capital
gain(or)long term capital gain
3)Long term capital loss can be set
off againstlong term capital gain
4)Tax rate 15 percentage 4)Tax rate is 20 percentage
Performa for short term capital and long term capital gain:-
# Shortterm capital gain
Particulars Amt Amt
Sales Consideration
Less: Exp in relation Totransfer
(Brokerage,commission)
Net Consideration
Less: Cost Acquisition
Less: Cost of improvement
Less: Exp. on Purchase
xxx
xxx
xxx
xxx
xxx
xxx
xxx
Shortterm capital gain/ loss
Less: Exemptionu/s54B,54D
XXX
XXX

4. Net ShortTerm CapitalGain XXX
# Long term capital gain
Particulars Amt Amt
Sales Consideration
Less: Exp in relation Totransfer
(Brokerage,commission)
Net Consideration
Less: Indexed Cost Acquisition
Less: Indexed Cost of improvement
Less: Exp. on Purchase
xxx
xxx
xxx
xxx
xxx
xxx
xxx
Long term capital gain/ loss
Less: Exemptionu/s54,54B,54EC,54F
Net Long Term Capital Gain
XXX
XXX
XXX
FULL VALUE OF CONSIDERATION:
The word “Full value” refers to “whole price” without any deduction
whatsoever an it does not refer to adequacy or inadequacy of price bargained for.
“Consideration”refers to the amount received by the transferor in lieu of the assets he
gives up.
C.I.I [COST OF INFLATION INDEX]-

5. To avoid the inflation effect, the value of the capital assets is brought to present
value using the cost of inflation index.
In short, the central govt. having regard to 75% of average rise in the consumer price
index for the immediately preceding previous year to such previous year.
The Base year for the capital inflation index is first April 1981(100) @ now it’s based on
financial year of 2001-02 (100)
# COA: [COST OF ACQUISITION]
‘Cost of acquisition’ of an asset is the amount paid by the assessee to acquire it.
All the capital expenses paid for acquiring the title to the property are termed as the
cost of acquisition.
‘Indexed Costof Acquisition’-(48) Indexed cost of acquisition means an amount
which bears to the cost of acquisition the same proportion as cost inflation index for
the year in which the asset is transferred bears to the cost inflation index for the first
year in which the asset was held by the assessee.
COST OF ACQUISITION
Before 2001-02 After 2001-02
Actual cost Actual cost x CII of sale year/ CII of
acquisition
Or F.M.V W.E.H x CII of Sale year
CII OF 2001-02
#COI: [COST OF IMPROVEMENT] 49 (1)

6. ‘Cost of Improvement’ any expenditure incurred toincrease the value of capital
asset ( making any addition/alteration).
‘Indexed Costof Improvement’-Indexed cost of improvement means an amount
which bears to the cost of improvement the same proportion as cost inflation index for
the year in which the assetis transferred bears to the cost inflation index for the year in
which the improvement to the asset took place.
INDEXED COST OF IMPROVEMENT
Before 2001-02 After 2001-02
Ignore Actual cost x CII of sale year/CIIof
improvement
NOTE:-
1) If given W.D.V (Written down Value)take only W.D.V not Actual cost.
2) Current CII 280 (2018-19). CII for [2001-02]=100.
# RelevantProvisionsIn relation to CII:
1. Indexing of Long term assets only.
2. No indexing of long term debentures and bonds.
3. No indexing of Short-term capital assets.
4. No Indexing of depreciable assets.
5. No Indexing of share of NR.
EXEMPTIONFROM CAPITAL GAIN:-
1) Sec 54-Sale ofResidentialProperty and PurchaseofanotherResidentialProperty:-

7. 2) Sec 54B-Sale of an agricultural land and purchase of another agriculture land:-
3) Sec 54D-Compulsory acquisition of land and Building:
If any land and Building acquired by compulsorily by any government.
4) Sec 54EC-investment in specified bonds:-
If the amount is invested “REC (Rural Electrification Corporation (or) NHAI
(National Highways Authorityof India) with in a Period of 6months from the date of
transfer.
FOR SHORT TERM CAPITAL GAIN:-
Mr. Ghosh sold a house on 01.09.2018 for Rs. 12, 00,000. This house was
inherited by him during 2014-15 Rs.70,000 . Mr. Ghosh spent Rs.50,000 on renovation
of the house in 2015-16. Fair market value Rs.1,50,000.
[C.I.I for 2014-15- 240, 2015-16 – 254, 2016-17 – 264, 2018-19 – 280]
SOL:-
Computationofcapital gain (P.Y.2018-19)
Particulars Amt Amt
Sales Consideration
Less: Exp in relation Totransfer
(Brokerage,commission)
Net Consideration
Less: Cost Acquisition
Less: Cost of improvement
Less: Exp. on Purchase
12,00,000
-
50,000
70,000
-
12,00,000
1,20,000

8. Shortterm capital gain/ loss 10,80,000
NOTE:-
1) If any advance money forfeited has been deducted from cost of acquisition as it was
forfeited prior to 1.4.2014.
2) No need to take [F.M.V] value after given [2001-02].
FOR LOND TERM CAPITAL GAIN:-
SUM1:-
Mr. Vasudav sold a house on 1.9.18 for Rs.12, 00,000.This house was inherited by
him during 2001-02, from his father who had constructed it in 1981-82 for Rs 50,000.
Mr. Ganesh spend Rs.70,000 on renovation of the house in 2006-07, FMV of the house
as on 1.4.01 was Rs.1,50,000.
Compute the amount of capital gain assuming does not quality for any
exemption:-[CII=2001-02=100, 06-07=122, 2010-11=167, 2018-19=280.]
SOL:-
Particulars Amt Amt
Full value of consideration.
(-)Exp on transfer of c. assets
Net Consideration
(-)indexed cost of acquisition
(-)indexed cost of improvement
4,20,000
1,60,665
12,00,000
_
12,00,000
580,665

9. 6,19,335
Workings:
= Actual cost
or F M V W E H X CII of sale of year/ CII of 2001-02
50,000or 1, 50,000W.E.H = 1,50,000
= 1, 50,000X 280/100 = 4,20,000
= Actual cost x CII of sale year/CIIof improvement
= 70,000 X 280/ 122 = 1,60,655
INCOME FROM OTHER SOURESS [U/C 56 to 59]
Meaning:-
Any incomes which could not be categorized/ taxable under any other head shall be
taxed under this head, known as income from other sources.
Typesof income:-
INCOME (Sec-56)
Generalincome sec 56(1) Specified income sec 56 (2)
1. Directors fees (other than business) 1.Diridend from:
a) foreign company
2. Examinorshipfees b) co-operative company

10. 3. Income from intereston government 2.casualincome:-
Securities a) lottery
4. Income from bank deposit b) horse race
5. Income from royalty of books c) cross word puzzles
d) Betting
e) Gambling
f) Card game
3. Interest on securities
from non- Governmentsecurities.
4. Gift income.
GIFT INCOME
Monetary gift Property
gift
Aggregate value >50,000 Immovable Movable
(specified)
Whole value taxable Stamp value>50,000 Aggregate F.M.V
Value>50,000

11. Stamp value taxable F.M.V value
Taxable
GIFT INCOME:-
Any monetary value/ property value received with any consideration from
someone.
Meaning ofRelative:-
1. Spouse of the individual
2. Brother or sister of the individual
3. Brother in law/ sister in law
4. Brother or sister of spouse of the individuals
Meaning ofproperty:-
Exemptionfrom income from other sources: - U/S 57.
Any sum of money or property received:-
a) From any relative (or) ,
b) One the occasion of marriage ofthe individuals.
c) Under a will or by way of inheritance
d) From any local authority or.
e) From employer, (A university or other educational institutions).
f) By an H.U.F from its member.
Performa for Income From Other Sources:
1. Shares & securities,
2. Jewellary
3. Archaeologicalcollations
4. Drawings
5. Paintings
6. Immovable property means,
[Land, Building, plot]
PARTICULARS Amt Amt

12. I Generalincome: sec6(1)
Directors fees
Examinorshipfees
Income from intereston governmentsecurities
Income from bank deposits
Income from royalty of books
Income from agriculture outside India
Less: expenses relating above
Legal taxes
Collection charges
Generalincome
II Specified income sec 56(2)
A Dividend:
I] Dividend from foreign company
II] Dividend from co-operative company
Less: collection charges
B Casualincome: [30%TDS]
A] lotteries :[> 10,000 Rs]T.D.S
In case of received [actual amount * 100/100-30]
B] Cross Word Puzzles
C] Betting
D] Gambling
E] Card Games
F] Horse Race [> 5,000 Rs]T.D.S
Actual amount *100/(100-30)[If given as received
only]
Less: Expense On Horse:
C] Interest on securities: [TDS 10 %]
i) Debenture on commercial from
ii) Shares of a LTD Actual Amount*100
‘ 100-10
iii)Bonds 15% of Non-governmentCompany
D] Family Pension:
Actual amount
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
(A)
XXX
XXX
XXX

13. Casualincome:
Any amount received by without any effort, where as lack basic. Such, card games,
lottery, horse race….etc…
TDS: Tax Deductible Sources: [u/s 193]
Before making payment of interest on securities, it is the duty of the security-
issuing authority to deduct tax at source. On such interest payable at the rates in force
during the previous year.
For income from othersources:
Sum1
Compute Income From Other Sources from following particulars:
 Interest on deposits with A company Rs.10, 000
 University remuneration for working as examiner Rs.6, 000
 Royalty for writing books Rs.60, 000
 He claims to have spent Rs.20, 000 for writing books.
 Dividend declaredby R & Co on 1.3.17butpaid on 1.5.17 Rs.6, 000
 Interim dividend paid on 1.5.17 Rs.3, 000
 Stake money on race horse Rs.1,50,000
 Horse are maintainedby nitand expenses spend Rs.2, 40,000
Less: StandardDeduction
# 1/3 of pension received W.E.L
# Rs.15,000
E] Gift Income :u/s56(v)
Receive other than relatives’
Specified income
Income from othersources {A+B)
XXX
XXX
XXX
XXX
(B)
XXX

14.  Familypension received Rs.36, 000
Sol:
Particulars Amount Amount
I. GeneralIncome
Dividendfrom R & Co
Interim dividendR & C0
Stake money on horses
(-) maintenances
Generalincome
II. Specified Income:
Family pension:
Actually received
(-) 1/3 of pension 36,000*1/3 =12,000
Standarddeduction =15,000
W.E.L
Royalty of books (General Income)
(-) expenses
Universityexaminers fees
Interest on deposits a company
Income From Other Sources
-
-
1,50,000
- 2,40,000
36,000
12,000
60,000
20,000
- 90,000
24,000
40,000
6,000
10,000
80,000

15. For gift income:
Sum1
Mr. A received the following gifts during P.Y 2018-19
He receives a gift in cash of rs.20, 000 from his uncle on 30.6.18
He received a cheque from brother on 10.11.18 rs.30, 000
He received a gift rs.21, 000 on his wedding from Mr.X on 1.12.18
He received 25,000 as giftfrom his nonresident friend Mr.Y on 30.12.18
He received a gift of rs.51, 000 from his brother in law on 31.1.19
He received rs.5, 000 from Mr.Z his residentfriend on 15.2.19
Calculate the amount of taxable giftchargeableunder the head other sources:
Sol:
Particulars Amount
1. Gift received from residentfriend 25,000
2. From his elder brother ---
3. From his uncle 20,000
4. From Mr. Wedding function ---
5. From his brother in law ---
6. From his residentfriend 5,000
Totalmonetary gift 50,000