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PRESENTED BY:-Kanchan Narayan
BBA-6TH Sem.
CAPITAL GAINCAPITAL GAIN
What Is Capital Gain??What Is Capital Gain??
A capital gain is a profit that results from investments into a capital assets, such as stocks,bonds or real estate, which exceeds the purchase price.
It is the difference between a higher selling price and a lower purchase price, resulting in a financial gain for the investor.
Elements Of Capital Gain:-Elements Of Capital Gain:-
Capital assets
Transfer of capital assets
Computation of capital gain
Capital AssetsCapital Assets
It means property of any kind held by an assesses whether connected with his business, profession or not.
It may be moveable or immovable, tangible or intangible, fixed or floating etc.
It includes such as goodwill, leasehold right, jewellery, manufacturing license etc.
Types Of Capital Assets:-Types Of Capital Assets:-
Short-term capital assets
Long-term capital assets
Transfer Of Capital AssetsTransfer Of Capital Assets[sec.2(47)][sec.2(47)]
Sale Relinquishment of the assets Exchange Extinguishment of any right in an asset Conversion of asset into sock-in-trade by the owner Maturity or redemption of a zero coupon bond
Computation Of Capital Gain Computation Of Capital Gain [[sec.48(1)]sec.48(1)]
Short-term capital gain [sec.2(42B)]
STCG = Purchase Value - Current Asset Value
Long-term capital gain [sec.2(29)B]]
LTCG = Purchase Value - Current Asset Value
Format of STCGFormat of STCG:-:-
Sales considerationLess:-selling expenses
Net sale considerationConsiderationLess:-cost of acquisition cost of improvement
Short-term Capital Gain
Less:- limited exemptions Taxable STCGTaxable STCG
Format Of LTCG:-Format Of LTCG:-
Sales considerationLess:-selling expenses
Net sale consideration
Less:-indexed cost of acquisition indexed cost of improvement
long term capital gain
Less:- All exemptions Taxable LTCG
Tax On Capital GainTax On Capital Gain
Tax on short term capital gain
Tax on long term capital gain
Tax On Short Term Capital gainTax On Short Term Capital gain
It means transfer of shares on which security transaction tax has been charged [sec111(A)]
Applicable to• All assesseeCondition to be satisfied• STCA being an equity share in a company or a unit of an equity
oriented fund.• Transaction is chargeable to Security transaction tax. Tax Rate• STCG shall be taxed @15%+surcharge+education cess including
SHEC.
Tax On Long term Capital GainTax On Long term Capital Gain[sec.112(1)][sec.112(1)]
It means share on which transaction tax has been charged [sec.10(38)].Applicable to• All assessseeCondition to be satisfied• Any income arising from the transfer of a LTCA, being an equity share in
a company or a unit of an equity oriented fund.• Transaction is chargeable to Security transaction tax.Tax Rate• LTCG arising on transfer of Zero coupon bonds shall be calculated @10%
+surcharge+education cess+SHEC without indexation.
EXEMPTION - 54EXEMPTION - 54Section
Applicable to
Conditions
Time limit for acquisition of new assets
Deduction
Revocation of benefit
54
Individual or Huf
Assessee has transferred a long-term residential house, income of which is taxable under the head of Income From house property”.
It must acquire a new residential house within prescribed time limit.
For purchase within a period of 1yr. before, or 2 year after, the date of transfer.
For construction with in a period of 3 years after the date of transfer.
Investment in the new assets or Capital gain
If the newly acquired residential house is transferred with in 3 years from the date of acquisition of new assets, then the benefit availed earlier shall be revoked. Revoked income shall be reduced from cost of acquisition of new assets.
Exemption - 54bExemption - 54bSection
Applicable to
Conditions
Time limit for acquisition of new assets
Deduction
Revocation of benefit
54 B
Individual or Huf
Assessee must have transferred a capital asset being an agriculture land. Agriculture land must have been used by the individual or his parents for agriculture purpose for at least 2 yr. prior to its transfer.
With in 2 years after the date of transfer.
Investment in the new assets or Capital gain.
If the newly acquired residential house is transferred with in 3 years from the date of acquisition of new assets, then the benefit availed earlier shall be revoked. Revoked income shall be reduced from cost of acquisition of new assets.
EXEMPTION - 54ecEXEMPTION - 54ecSection
Applicable to
Conditions
Time limit for acquisition of new assets
Deduction
Revocation of benefit
54 EC
All assessee
Assessee must have transferred any long-term capital asset.
It acquires ‘long-term specified assets’.
Within 6 months after the date of transfer.
Investment in the new assets or capital gain.
Earlier benefit shall be revoked in such bond each transferred or converted into money within 3 year of its acquisition or a loan is taken security of the new asset within the said period. Revoked income shall be reduced from cost of acquisition of new assets.
EXEMPTION - 54FEXEMPTION - 54FSection
Applicable
Conditio
ns
Time limit
Deduction
Revocation of benefit
54F
Individual or Huf
Assessee must have transferred a long-term capital asset other than a residential house property. It must acquire a one residential house within prescribed time limit. It doesn’t purchase, within 2yrs, or construct, within 3yrs of transfer of the original asset
For purchase within a period of 1yr. before, or 2 year after, the date of transfer.
For construction with in a period of 3 years after the date of transfer.
Investment in the new assets*Capital gain/net sale consideration
Capital gain [net sale consideration=sale consideration – exp.on transfer
If the newly acquired residential house is transferred with in 3 years after the date of acquisition ,benefit availed earlier shall be revoked. Another residential house is purchased by the assessee within 2 yr. or constructed within 3 yrs.after the date of transfer of original asset.
QUESTION:-QUESTION:-
Mrs. Ritika acquired land on 1/4/77 for Rs.10,000. the fair market value as on 1/4/81 was Rs. 12,500. As on 1/4/2008, she sold such land for Rs. 1,40,000. Brokerage @1% of sale value was paid by her.
Compute capital gain of Mrs. Ritika for the A.Y. 2009-10.
CII- 2008-09=582
1981-82=100
Solution:-Solution:-
Working notes:-Expenses on transfer:-1% of Rs.1,40,000Indexed cost of acquisition:-Rs.12,500*582/100
PARTICULARS DETAILS AMOUNT
Sale consideration 1,40,000
Less:-Expenses on transfer 1,400
Net sale consideration 1,38,600
Less:-indexed cost of acquisition 72,750
indexed cost of improvement NIL 72,750
LONG TERM CAPITAL GAIN(65,850)