Capital Gain refers to the profit earned from the sale of capital assets such as land, building, mutual funds etc. It is of two types:
Capital Gains are an exception to the slab rule under the Income Tax Act. These are taxed according to the type of asset and the holding period. The following table summarises the taxation rules for capital gains on various assets:
|
Asset |
Holding Period |
Term |
Tax rate |
|
House Property |
>24 months |
Long term |
20% |
|
<24 months |
Short term |
According to slab rate |
|
|
Debt mutual funds |
>36 months |
Long term |
20% after indexation |
|
<36 months |
Short term |
According to slab rate |
|
|
Equity mutual funds |
>12 months |
Long term |
Gains of more than Rs. 1lakh are taxable @10% |
|
<12 months |
Short term |
15% |
|
|
Shares (Securities transaction tax unpaid) |
>12 months |
Long term |
20% |
|
<12 months |
Short term |
According to slab rate |
|
|
Shares (Securities transaction tax paid) |
>12 months |
Long term |
Gains of more than Rs. 1lakh are taxable @10% |
|
<12 months |
Short term |
15% |
|
|
Fixed maturity plans |
>36 months |
Long term |
20% |
|
<36 months |
Short term |
According to slab rate |
*Securities Transaction Tax (STT) is payable on the value of shares bought or sold through a recognised stock exchange.
