Profits earned from the sale of financial assets are known as capital gains. Long-term and short-term capital gains are the two forms of capital gains. Short-term capital assets include those owned for less than 36 months, whereas long-term capital assets include those owned for more than 36 months. Any financial asset, such as mutual funds or stocks, or any realty product, such as land, buildings, and so on, are considered financial assets. A capital gain is an increase in the value of any of these when you sell them.
Short term property gain tax:
Full value consideration – (cost of acquisition + cost of improvement + cost of transfer) = short-term capital gain.
For example:In October 2013, Mr. Rajan paid Rs 25,00,000 for a land in Mumbai. In November 2014, he sold it for Rs 35,00,000. He put Rs 2,50,000 into the PPF and another Rs 50,000 into the NSC. What is Mr. Kumar's total taxable income, as well as his capital gains tax on short-term capital gains?
Solution:Because property is not subject to section 111A of the Income Tax Act, MR. Kumar is eligible for deductions under Sections 80C through 80U. He is eligible for a total deduction of Rs 2,00,000 (PPF+NSC). The computations are now as follows:
Short-term property gains: Rs 30,00,000 – Rs 25,00,000 = Rs 5,00,000/-
This is his total gross revenue.
Section 80C to 80U deductions – Rs 3,00,000/-
Rs 5,00,000 – Rs 3,00,000 = Rs 2,00,000/- Taxable Amount
He is now leaning toward paying a 15% short-term capital gains tax on this amount (less the cess)[this is based on his current income bracket].
As a result, he owes Rs 30,000 in short-term capital gains tax.
Read More: How to calculate capital gain tax amount? What is capital gain tax in India? Is long term capital gain taxable?Your Feedback Matters! How was this Answer?
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Calculation of capital gaiñ tax
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2022-01-03T10:17:59+00:00 2022-01-06T01:04:16+00:00Comment
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