1. The document discusses the classification of assets into capital assets and non-capital assets. It defines capital assets and lists some examples. 2. Capital gains are profits from the sale of capital assets. It distinguishes between short term capital gains from assets held for less than 3 years and long term capital gains from assets held for more than 3 years. 3. The tax treatment of capital gains depends on whether short term or long term, and whether Securities Transaction Tax was paid. Long term gains may be tax exempt if STT was paid.

1. Made By :-
Rohit Singh

2. House Business/ Capital Other
Salary
Property Profession Gains Sources

4. Any asset like land, motor
car, plant and machinery,
furniture and fixture, shares,
debentures etc.

5. Exceptions:-
Stock-In-Trade
Movable items of PERSONAL USE
Example:- TV, AIR CONDITIONER, GENERATOR,
PERSONAL MOTOR CAR etc.
BUT, These Four Movable Items Which Will Be
Considered As Capital Asset:-
I. Jewellery
II. Archaeological collections
III.Drawings
IV.Sculptures
Agriculture Land In Rural Area
Gold Deposit Bonds
(Bond Issued Against Security Of Gold)

6. CAPITAL NON CAPITAL
ASSET ASSET
Immovable items Stock in trade
Movable items personal
use
Movable items
personal use:-
Agriculture Land
1. Jewellery
2. Archaeological collection ( Rural Area)
3. Drawings
4. sculptures
Gold Deposit Bonds

7. CAPITAL
ASSET
SHORT LONG
TERM TERM
CAPITAL CAPITAL
ASSET ASSET

8. Capital Asset Sold Within A
Period Of 3 Yrs From The
Date Of Purchase Is
Considered As Short Term
Capital Asset.

9. Capital Asset Sold After
3 Yrs From The Date Of
Purchase Is Considered
As Long Term Capital
Asset.

10. PERIOD OF 3 YEARS WILL BE TAKEN AS
1 YEAR IN THE FOLLOWING CASES:-
Shares In Any Company
Units Of Mutual Funds
Zero Coupon Bond
• Issued For A Minimum Period Of 10 Yrs And Max
Period Of 20yrs
•No Regular Returns
•Additional Amount Received On Maturity Will Be
Considered As Capital Gain
Any Other Listed Securities like Debentures, Bonds
Etc.

11. Shares
Units Of 3yrs Will Zero
Mutual Be Taken Coupon
Funds As 1yr Bond
Any Other
Listed
Securities

12. Profit or gains on the
sale of capital asset shall
be considered as capital
gain.

14. Capital Gain
SHORT TERM LONG TERM
CAPITAL CAPITAL
GAIN GAIN
STT STT NOT STT STT NOT
PAID PAID PAID PAID
*STT (SECURITY TRANSACTION TAX)

15. CASE 1
(LONG TERM CAPITAL GAIN)
1.STT PAID - EXEMPT U/S
10(38)
2.STT NOT PAID - TAXABLE
@20%

16. CASE 2
(SHORT TERM CAPITAL GAIN)
1.STT PAID – TAXABLE
@15% U/S 111A
2.STT NOT PAID – TAXABLE
@SLAB RATE

17. PARTICULARS AMOUNT
Full Value Of Consideration xxxx
(-) Cost Of Acquisition xxxx
(-) Cost Of Improvement xxxx
(-) Selling Expenses xxxx
Short Term Capital Gain xxxx

18. Computation Of Long Term Capital Gain
PARTICULARS AMOUNT
Full Value Of Consideration xxxx
(-) Indexed Cost Of Acquisition xxxx
(-) Indexed Cost Of Improvement xxxx
(-) Selling Expenses xxxx
Long Term Capital Gain xxxx

19. HOW TO DO INDEXATION…???
Inflation Index Of
Current Year
Amount
Inflation Index Of
Base Year

21. Mr. X Purchased Shares For
Rs 2 Lacs In July 2011. Then He
Sold Those Shares In Feb 2012
For Rs 5 Lacs. Selling
Expenses Are Rs 20k.
What Will Be His Income U/H
Capital Gain in assessment year
2012-13?

22. SOLUTION
PARTICULARS AMOUNT
Full Value Of Consideration 500000
(-) Cost Of Acquisition 200000
(-) Selling Expenses 20000
Short Term Capital Gain 111A 280000

23. Mr. X Is Engaged In The Business Of
Sale And Purchase Of Shares.
He Sold Shares Of Rs 50 Lacs In A Year
And Has Paid STT @ .25% Of Sale Price
And Cost Of These Shares Purchased In
Aug 2010 Was Rs20 Lacs.
What Will Be His Income U/H Capital
Gain For Assessment Year Year 2012-13?

24. Income U/H Capital Gain Will Be
Zero Because Shares Will
Considered As Stock-in-trade
Because Business Man Is Doing
Business With These Shares.
Therefore, It Will Not Be
Considered As Capital Asset. Hence
There Will Not Be Any Income U/H
Capital Gain.

25. Mr. X purchased shares for Rs
2lacs in July 1995.
Then he sold those shares in Feb.
2012 for Rs 30lacs.
Selling expenses are Rs 40k.
What will be his income u/h
capital gain in assessment year
2012-2013?

26. SOLUTION
PARTICULARS AMOUNT
Full Value Of Consideration 3000000
(-) Indexed Cost Of Acquisition 558719
(-) Selling Expenses 40000
Long Term Capital Gain 2401281

27. CALCULATION OF INDEX
COST OF ACQUISITION
785
Rs 200000 Rs 558719
281