A capital asset includes any property or security owned by an individual, regardless of its connection to his/her business. Securities which adhere to rules under the SEBI Act of 1992 classify as capital assets in India.
Long Term Capital Assets vs Short Term Capital Assets:
Short term capital assets – Any asset owned by an individual (taxpayer) for less than 3 years since the date of transfer/ownership is referred to as a short term capital asset. This duration should be less than 12 months in case of shares.
Long term capital assets – Any asset owned by an individual (taxpayer) for more than 3 years since the date of transfer to his/her name is treated as a long term capital asset. This duration is taken as 12 months or more in case of shares.
Short Term and Long Term Capital Gain:
Capital gain earned by an individual in lieu of transfer of a short term capital asset is termed as short term capital gain.
Capital gain earned by an individual in lieu of transfer of a long term capital asset is termed as long term capital gain.
Exemption of Long-Term Capital Gain of a Residential House:
Exemption of Long-Term Capital Gains Regarding Any Other Asset:
If there is a loss under the head “Capital Gains”, then the loss is to be computed as loss in respect of short-term capital asset and loss in respect of long-term capital asset, respectively. It has to be remembered clearly that short-term capital loss can be set off or adjusted against long-term capital gain.
Want to know how to be SAFE FROM INCOME TAX NOTICES? Just give a missed call on Filing Mantra helpline +91-9533990091 or Email to firstname.lastname@example.org, to schedule a call with our tax experts. Filing Mantra offers FREE tips and best practices on how to save tax, be compliant and safe from income tax notices.