- Any capital gains arising from the transfer of a capital asset during an assessment year is chargeable to capital gains tax in the immediately following assessment year, unless exempt. - For capital gains tax to apply, there must be a capital asset, it must be transferred by the assessee, the transfer must occur during the relevant year, and any profit or gains must arise from the transfer. - Certain assets are excluded from the definition of capital assets, including certain personal assets and government securities. Capital assets are classified as short-term or long-term based on the period of holding, with different tax rates and exemptions applying.

1. -Computation
-Application
-Tax Planning

2.  Any gain arising from transfer of a capital asset during a PY is
chargeable to tax under the head “Capital Gains” in the
immediately following AY, if it is not eligible for exemption
under section 54, 54B, 54D, 54EE, 54EC, 54F, 54G, 54GA and
54GB and 54H
 The capital gain’s tax liability arises only when the following
conditions are satisfied.
 There should be a capital asset.
 The asset is transferred by the Assessee.
 Such transfer has taken place during the PY.
 Any profit or gains arises as a result of transfer.
 Such profit or gains is not deductible from tax under section
54, 54B, 54D, 54EC, 54 EE, 54F, 54G, 54GA and 54GB

3.  What is included in and excluded from Capital Asset:
 Capital Asset is defined to include property* of any kind,
whether fixed or circulating, movable or immovable, tangible
or intangible. The following assets are, however, excluded
from the definition of ‘capital assets’.
 * Property includes any rights in or in relation to an Indian
company, including rights of management or control or any
other rights whatsoever.

4. 1. Stock in trade held for business
2. Agricultural land in India not in urban area i.e., an area with
population more than 10,000.
3. Items of personal effects, i.e., personal use excluding
jewellery, costly stones, silver, gold.
4. Special bearer bonds 1991
5. 6.5%, 7% Gold bonds & National Defence Bonds 1980.
6. Gold Deposit Bonds 1999.

5. There are two types of Capital Assets:
1. Short Term Capital Assets (STCA): An asset, which is held by
an Assessee for less than 36 months, immediately before its
transfer, is called Short Term Capital Assets. In other words, an
asset, which is transferred within 36 months of its acquisition by
Assessee, is called Short Term Capital Assets.
2. Long Term Capital Assets (LTCA): An asset, which is held by
an Assessee for 36 months or more, immediately before its
transfer, is called Long Term Capital Assets. In other words, an
asset, which is transferred on or after 36 months of its acquisition
by Assessee, is called Long Term Capital Assets.

6. The period of 36 months is taken as 24/12 months under
following cases:
 Immovable Property- 24 months
 Unlisted Shares- 24 months
12 Months;
 Equity or Preference shares,
 Securities like debentures, government securities, which are
listed in recognised stock exchange,
 Units of UTI
 Units of Mutual Funds
 Zero Coupon Bonds

7.  The profit on transfer of STCA is treated as Short Term Capital
Gains (STCG) while that on LTCA is known as Long Term
Capital Gains (LTCG).
 While calculating tax the STCG is included in Total Income
and taxed as per normal rates, while LTCG is taxable at a flat
rate of 20%.
 In the case of transfer of a depreciable asset (other than an
asset used by a power generating unit eligible for depreciation
on straight line basis), capital gain (if any) is taken as short
term capital gain, irrespective of the period of holding.

8.  Sec 2(47): Transfer in relation to a capital asset, includes sale,
exchange or relinquishment of the asset or the extinguishment of any
rights therein or the compulsory acquisition thereof under any law.
 Transactions not regarded as transfer (Sec-47)
 ‘Transfer’ when complete and effective:
 Immovable property when documents are registered (Alapati Venkatramiah v.
CIT[1965] 57 ITR 185 SC): Title to immovable assets will not pass till the
conveyance deed is executed or registered.
 Immovable property when documents are not registered: If the conditions
under 53A of TP Act are satisfied, ownership in an immovable property is
‘transferred’.
 There should be a contract in writing.
 The transferee has paid the consideration and or willing to perform his part.
 The transferee should have taken possession of the property.
 Movable Property: Title to a movable property passes at the time when the
property is delivered pursuant to a contract to sell (supra).

9.  The tax incidence is usually higher in case of STCG.
1. Find out the full value of consideration.
2. Deduct the following:
a. Expenditure incurred wholly and exclusively in connection with
such transfer.
b. Cost of Acquisition
c. Cost of Improvement
3. From the resulting sum deduct exemption provided by section 54 .
The balancing figure is STCG.

10. 1. Find out the full value of consideration.
2. Deduct the following:
a. Expenditure incurred wholly and exclusively in connection with
such transfer.
b. Indexed Cost of acquisition
c. Indexed Cost of Improvement
3. From the resulting sum deduct exemption provided by section 54 .
The balancing figure is LTCG.

11. Capital Assets Who is the
transferor
Bonds or Debentures(other than capital indexed bonds
issued by the Government)
Shares in or Debentures of an Indian company
acquired by utilizing convertible foreign exchange (first
proviso to Sec-48)
Depreciable Asset(other than power generating units)
Undertaking or division transferred by way of slump
sale(Sec- 50B)
Units purchased in foreign currency (Sec-115AB)
GDR purchased in foreign currency (Sec-115AC)
GDR purchased in foreign currency (Sec-115ACA)
Securities as given in (Sec- 115AD)
Any Person
Non-Resident
Any Person
Any Person
Offshore Fund
Non-Resident
Resident Individual
FII

12. Full value of consideration means & includes the
whole/complete sale price or exchange value or
compensation including enhanced compensation received
in respect of capital asset in transfer.
The following points are important to note in relation to
full value of consideration.
 The consideration may be in cash or kind.
 The consideration received in kind is valued at its fair
market value.
 It may be received or receivable.
 The consideration must be actual irrespective of its
adequacy.

13. Expenditure incurred wholly and exclusively for transfer of capital
asset is called expenditure on transfer. It is fully deductible from the
full value of consideration while calculating the capital gain.
Examples of expenditure on transfer are:
 The commission or brokerage paid by seller,
 Any fees like registration fees,
 Cost of stamp papers etc.,
 Travelling expenses, and litigation expenses incurred for transferring
the capital assets are expenditure on transfer.
Note: Expenditure incurred by the buyer at the time of buying the
capital assets like brokerage, commission, registration fees, cost of
stamp paper etc. are to be added in the cost of acquisition before
indexation.

14. Cost of Acquisition (COA) means any capital expense at the
time of acquiring capital asset under transfer, i.e., to include
the purchase price, expenses incurred up to acquiring date in
the form of registration, storage etc. expenses incurred on
completing transfer.
In other words, cost of acquisition of an asset is the value for
which it was acquired by the Assessee. Expenses of capital
nature for completing or acquiring the title are included in the
cost of acquisition.
Indexed Cost of Acquisition = COA X CII of Year of transfer
/CII of Year of acquisition

15. Financial Year Index Financial Year Index
2001-02 100 2011-12 184
2002-03 105 2012-13 200
2003-04 109 2013-14 220
2004-05 113 2014-15 240
2005-06 117 2015-16 254
2006-07 122 2016-17 264
2007-08 129 2017-18 272
2008-09 137 2018-19 280
2009-10 148 2019-20 289
2010-11 167 2020-21 301
2021-22 317 2022-23 331
2023-24 348
Note: Indexed cost of acquisition has to be ascertained with reference to
the date of acquisition and not withreference to the date when such asset
became a capital asset.

16.  54(Amended)
 54B
 54D
 54EC
 54EE
 54F
 54G
 54GA
 54GB
 54H

17. Capital Gains arising from the transfer of
Residential House Property (Sec-54)
Who can claim Exemption
Which specific asset is eligible
for Exemption
Which asset the tax payer
should acquire to get the benefit
of Exemption
What is the time limit of
acquiring the new asset
How much is Exempt
Is it possible to revoke the
exemption in a subsequent year
An Individual or HUF
If a residential house property(long term) is
transferred
Exemption is available if another residential
house property is purchased or constructed
Purchase: Within 1 yr before transfer
or 2 yrs after transfer
Construction: Within 3 yrs of transfer
Investment in the new asset or capital gain,
whichever is lower
If the new asset is transferred within 3 years of
its acquisition, the exemption will be revoked

18. Capital Gains arising from the transfer of
Land Used for Agricultural Purpose (Sec-54 B)
Who can claim Exemption
Which specific asset is eligible
for Exemption
Which asset the tax payer
should acquire to get the benefit
of Exemption
What is the time limit of
acquiring the new asset
How much is Exempt
Is it possible to revoke the
exemption in a subsequent year
An Individual or (HUF w.e.f. AY 2013-14)
Any STCA or LTCA (being agricultural land) if it
was used for agricultural purpose at least 2
yrs. Immediately prior to transfer
Agricultural Land (urban/rural)
Purchase: Within 2 years from date of
transfer
Investment in the new asset or capital gain,
whichever is lower
If the new asset is transferred within 3 years of
its acquisition, the exemption will be revoked

19. Capital Gains on Compulsory Acquisition of
Land & Building forming part of Industrial
Undertaking (Sec-54 D)
Who can claim Exemption
Which specific asset is eligible
for Exemption
Which asset the tax payer
should acquire to get the benefit
of Exemption
What is the time limit of
acquiring the new asset
How much is Exempt
Is it possible to revoke the
exemption in a subsequent year
Any taxpayer
L & B (ST/LT) forming part of an industrial
undertaking which is compulsorily acquired by
the Govt. and which is used 2 yrs. for industrial
purpose prior to its acquisition
L & B for industrial purpose
Purchase: Within 3 years from date of
receipt of compensation
Investment in the new asset or capital gain,
whichever is lower
If the new asset is transferred within 3 years of
its acquisition, the exemption will be revoked

20. Capital Gains on transfer of any
LTCA on the basis of Investment in Certain
Bonds (Sec-54 EC)
Who can claim Exemption
Which specific asset is eligible
for Exemption
Which asset the tax payer
should acquire to get the benefit
of Exemption
What is the time limit of
acquiring the new asset
How much is Exempt
Is it possible to revoke the
exemption in a subsequent year
Any taxpayer
Any Long Term Capital Asset
Bonds of NHAI or REC. Maximum Investment
in one FY is Rs.50 Lakh*
[minor/spouse(separately 50 Lakh each)]
Within 6 months from the date of transfer
Investment in the new asset or capital gain,
whichever is lower
If the new asset is transferred within 5 years of
its acquisition, the exemption will be
revoked(LTCG). No collateralization even

21. Capital Gains on transfer of any
LTCA other than a House Property (Sec-54 F)
Who can claim Exemption
Which specific asset is eligible
for Exemption
Which asset the tax payer
should acquire to get the benefit
of Exemption
What is the time limit of
acquiring the new asset
An Individual or a HUF
CG on transfer of any LTCA provided on the
date of transfer the Assessee does not own
more than 1 house property(except the new
property)
One residential house property
Purchase: Within 1 yr. before or within 2 yrs.
after the transfer.
Construction: The construction should be
completed within 3 yrs
Compulsory Acquisition: These time limits shall
be determined from the date of receipt of
compensation (original or additional)

22. Capital Gains on transfer of any
LTCA other than a House Property (Sec-54 F)
How much is Exempt
Is it possible to revoke the
exemption in a subsequent year
Investment in the new asset / Net Sale
Consideration X Capital Gain (Amount of
exemption 30can not exceed capital gain)
I. If the new asset is transferred within 3
years of its acquisition, the exemption will
be revoked
II. If within 2 yrs. From the date of transfer of
the original assets, the tax payer
purchases another residential house
property
III. If within 3 years from the date of transfer of
original assets, the taxpayer completes
construction of another residential house
property.

23. Capital Gains on transfer of assets in cases of
Shifting Industrial Undertakings from Urban to
Rural Area (Sec-54 G)
Who can claim Exemption
Which specific asset is eligible
for Exemption
Which asset the tax payer
should acquire to get the benefit
of Exemption
What is the time limit of
acquiring the new asset
How much is Exempt
Is it possible to revoke the
exemption in a subsequent year
Any taxpayer
On transfer of STCA/LTCA being Land,
Building, Plant or Machinery. These assets
should be transferred for the above mentioned
Purpose.
Land, Building, Plant or Machinery in order to
shift the undertaking to a rural area.
New asset should be purchased within 1 yr.
before or within 3 years after the transfer
Investment in the new asset or capital gain,
whichever is lower
If the new asset is transferred within 3 years of
its acquisition, the exemption will be revoked.

24. Capital Gains on transfer of assets in cases of
Shifting Industrial Undertakings from Urban to
Rural Area (Sec-54 G)
Who can claim Exemption
Which specific asset is eligible
for Exemption
Which asset the tax payer
should acquire to get the benefit
of Exemption
What is the time limit of
acquiring the new asset
How much is Exempt
Is it possible to revoke the
exemption in a subsequent year
Any taxpayer
On transfer of STCA/LTCA being Land,
Building, Plant or Machinery. These assets
should be transferred for the above mentioned
Purpose.
Land, Building, Plant or Machinery in order to
shift the undertaking to a rural area.
New asset should be purchased within 1 yr.
before or within 3 years after the transfer
Investment in the new asset or capital gain,
whichever is lower
If the new asset is transferred within 3 years of
its acquisition, the exemption will be revoked.
For transfer of the new asset COA will be
Original COA – Exemption availed under Sec-

25. Capital Gains on transfer of assets in cases of
Shifting Industrial Undertakings from Urban to
SEZ (Sec-54 GA)
Who can claim Exemption
Which specific asset is eligible
for Exemption
Which asset the tax payer
should acquire to get the benefit
of Exemption
What is the time limit of
acquiring the new asset
How much is Exempt
Is it possible to revoke the
exemption in a subsequent year
Any taxpayer
On transfer of STCA/LTCA being Land,
Building, Plant or Machinery. These assets
should be transferred for the above mentioned
Purpose.
Land, Building, Plant or Machinery in order to
shift the undertaking to any SEZ.
New asset should be purchased within 1 yr.
before or within 3 years after the transfer
Investment in the new asset or capital gain,
whichever is lower
If the new asset is transferred within 3 years of
its acquisition, the exemption will be revoked.
For transfer of the new asset COA will be
Original COA – Exemption availed under Sec-

26. Capital Gains on transfer of a Residential House
Property (Sec-54 GB) (AY – 2013-14)
Who can claim Exemption
Which specific asset is eligible
for Exemption
Which asset the tax payer
should acquire to get the benefit
of Exemption
What is the time limit of
acquiring the new asset
An Individual or a HUF
On transfer of a long term Residential
Property(A house or a plot of land) if transfer
takes place during April 1, 2012 and March 31,
2021, eligible start up March 31, 2022.
Equity Shares in an eligible company*
Shares should be acquired on or before the
due date of filling return (sec-139). The eligible
company should utilize this amount for
purchase of a new asset within one year from
the date of subscription in equity shares. Bank
Deposits*

27. Capital Gains on transfer of a Residential House
Property (Sec-54 GB) (AY – 2013-14)
How much is Exempt
Is it possible to revoke the
exemption in a subsequent
year
Investment in the new asset by the eligible
company/ Net Sale Consideration x Capital Gain
(Amount of exemption can not exceed capital gain)
Exemption u/s 54GB will be LTCG in the year if the
Assessee commits the following defaults:
1. If the shares are transferred by the Assessee
within 5 yrs. From the date of acquisition.
2. If the new asset is sold or otherwise transferred
by the Assessee within 5 years from the date of
acquisition
3. If the deposit account is not utilized fully or partly
by the eligible company for purchasing the new
asset within 1 year from the date of subscription
to shares by the Assessee.

29. Bank Deposit: The sale proceeds should be utilized to
acquire the new asset within one year from the date subscription in
equity shares. If the company fails to do so by the due date of filing
returns, the amount should be deposited in Capital Gain Deposit
Account to be able to claim the exemption.

30. During the PY 2022-23, X sells the following assets.
Asset Date of
Sale
Sale
Proceeds
Date of
Purchase
Cost of
Acquisition
Rural Agricultural Land 15/6/22 2,00,000 1/3/2002 20,000
Urban Agri. Land 1/11/22 6,00,000 10/3/2002 30,000
Commercial Property 15/1/23 1,50,000 10/1/2003 1,25,000
Gold 13/2/23 3,50,000 20/1/2002 70,000
House Property (Res.) 04/3/23 4,00,000 1/1/2005 60,000
Ind. Land and Building (CA) 3/10/22 8,00,000 2/2/2005 40,000
Plant 1/7/22 20,00,000 1/4/2020 7,00,000
Res. Plot of Land 2/8/22 30,00,000 5/5/2009 30,000
Copyrights 7/8/22 40,000 1/4/2020 10,000
He purchased the following new assets.
Residential House 1/3/2023 50,00,000
Agri. Land in urban area 2/12/2022 15,00,000
L & B for Ind. Purposes 3/3/2023 15,00,000
NHAI Bonds 5/3/2023 10,00,000
REC Bonds 4/2/2023 5,00,000

31. X sells the following new assets.
Determine Taxable Short Term or Long Term Capital Gains on transfer of the
above assets for the PY 2022-23.
Cost Inflation Index*
Asset Date of Sale Amount
NHAI Bond 7/3/2023 2,00,000
Agri Land in Urban Area 5/3/2023 10,00,000
REC Bonds 4/3/2023 2,00,000