What do we mean by Capital Gain

Any profit arises on transfer of a capital asset is chargeable to tax under capital gain, if it Is not exempt under sec 54,54B, 54D, 54EC, 54F, 54G, 54GA.

Tax liability arises only if certain conditions are fulfilled. One of the basic conditions is that it should be capital asset as per income tax act and there must be the transfer of that capital asset and profit should arise from that transfer.

For the purpose of the taxability capital assets are divided into two category short term and long term. Any gain or loss arising from short term assets are known as short term capital gain or loss and any gain or loss arising from long term assets are known as long term capital gain or loss.

One of the basic criteria for dividing the assets is period of holding means for how long assets are owned by the assessee. And for asset to be treated as long term it should be owned for at least 36 months and for financial assets like equity shares, listed securities, units of mutual fund etc. tenure is reduced to 12 months.

Conditions for taxability of capital gain:-

Condition 1 

There should be a capital asset. 

Condition 2

Transferred by assess. 

Condition 3

It took place during previous year 

Condition 4

Profit occurs due to transfer. 

Condition 5

Should not be exempt under
sec 54,54B, 54D, 54EC,54F,54G ,54GA.

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