What is meant by Capital Gains ?
Capital Gains means, any profits arising from the transfer of Capital Asset affected in the previous year will be chargeable to income tax under the head ‘Capital Gains’. A capital gain may be short-term or long-term.
Defining Capital Assets:
As per section 2(14), a Capital Asset means –
- Property of any kind held by an assessee, whether or not connected with his business or profession;
- Any securities held by a Foreign Institutional Investor which has invested in such securities in accordance with the SEBI regulations.
However, it does not include the following:
- Any stock, consumables or raw material, held for the purpose of business or profession
- Personal goods such as clothes and furniture held for personal use
- Agricultural land in rural India
- 6½% gold bonds (1977) or 7% gold bonds (1980) or national defence gold bonds (1980) issued by the central government
- Special bearer bonds (1991)
- Gold deposit bond issued under the gold deposit scheme (1999) or deposit certificates issued under the Gold Monetisation Scheme, 2015.
- However, jewellery, archaeological collections, drawings, paintings, sculptures, or any work of art are not treated as personal effects and, hence, are included in the definition of capital assets.
- ‘Property’ includes and shall be deemed to have always included any rights in or in relation to an Indian company, including rights of management or control or any other rights whatsoever.
- Rural Agriculture Land means not being land situate –
- agricultural land situated in any area within the jurisdiction of a municipality or cantonment board having population of not less than 10,000 or
- agricultural land situated in any area within such distance, measured aerially, in relation to the range of population as shown hereunder –
|Shortest aerial distance from the local limits of a municipality or cantonment board referred to in item||Population according to the last preceding census of which the relevant figures have been published before the first day of the previous year.|
|(i)||≤ 2 kilometers||> 10,000 ≤ 1,00,000|
|(ii)||≤ 6 kilometers||> 1,00,000 ≤ 10,00,000|
|(iii)||≤ 8 kilometers||> 10,00,000|