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Capital gains may accrue from simple investments in a house property or ordinary shares to hugely complex investments such as financial instruments, Government securities, hedge funds, bonds and so on. Due to procedural complexities, this class of income tax payer requires special treatment.
A capital gain is a profit arising out of the sale of something of value that you own and had bought for speculative purposes. For example, an extra house, shares of a company, jewellery, painting, sculpture or work of art.
Income earned in this way is subject to capital gains tax. Returns on investment may be realized in the short term or long term, in which case, your net gain attracts short-term capital gains tax or long-term capital gains tax.
This plan covers e-filing of income tax returns for salaried individuals with income from capital gains and applicable deductions tied to your investments.
Capital gains may accrue from simple investments in a house property or ordinary shares to hugely complex investments such as financial instruments, Government securities, hedge funds, bonds and so on. Sometimes, LTCG tax may require being adjusted by the Cost Inflation Index to inflate the cost of acquisition or making improvements. Short term capital gains tax is taxed at different rates. Further, the holding period of different securities varies unequally.
Due to these and other procedural complexities, this class of income tax payer requires special treatment.
A capital gain is simply profit obtained from selling a capital asset. So, any income generated in this manner from the sale of such capital asset during the last financial year would be considered a capital gain on your income tax return form. This income would be subject to capital gains tax.
A capital asset, according to Section 2 of the Income Tax Act, 1961, and includes properties held but not in relation to any business or profession carried out by the taxpayer, securities held by a Foreign Institutional Investor under SEBI regulations, shares, G-secs, bonds except for Special bearer bonds, Gold bonds, Gold Deposit bonds and Gold Monetisation scheme, 2015, Deposit certificates.
Excluded from the definition are also stock in trade, consumables in inventory or raw materials to be used in manufacturing or trade.
Note that jewellery, painting, sculpture or other work of art held in speculation would be considered capital assets.
| Type of Capital Asset | Holding Period (in months) |
|---|---|
| Equity or Preference listed shares, Units of Equity Oriented Mutual Funds | 12 |
| Unlisted shares of Company | 24 |
| Immovable property being land or building | 24 (w.e.f. AY 2018-19) |
| All other Capital Assets | 36 |
Assets with holding periods less than those given above are classified as Short term capital assets.
The value of the capital gain is determined by subtracting the indexed cost of acquisition from the cost of the capital asset.
LTCG tax is applied at a rate of 20% + surcharge and education cess.
For listed securities, Securities Transaction Tax (STT) is also applicable. In addition, the STCG rate is 15% + surcharge and education cess.
Where STT is not applicable, the capital gain will be added to the yearly income and ordinary income tax rates according to the applicable slab will be computed.
Section 89(1) allows salary arrears or advances to be relieved of current tax rates (which may have risen since the income was earned) when being assessed for tax returns in the relevant Assessment Year.
Rule 21A of the Income Tax Rules enactment provides directions on how to apply this relief.
Form 10E is used to claim relief under section 89(1).
Form 10E is used to claim relief under section 89(1).
It is compulsory to e-file Form 10E on the income tax India login portal. You may not receive relief under Section 89(1) for salary arrears or advances otherwise.
Taxes are adjusted assuming that they were pending in the year in which they were accrued.
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