Capital Gain:- As per Indian Income Tax laws, a capital gain tax is a voluntary tax payable on the sale of assets, investments, capital accumulation, and productivity
Capital Gain can be divided into two parts with its name suggests one is capital and second is gain.
Capital investment: - is generally income earned from sale of Capital Investment, these investment may be as house or farmhouse, any stock, bond or shares and securities etc.
Gain: - Gain is generally the difference between sale and purchase price of the capital investment.
Capital Gain is of two types:-
1- Short term capital gain
2- Long term capital gain
Short term capital gain: - if any assets are sold with in three years to the date of purchase, it will be treated as short term capital gain. But in the contest of shares and securities the duration of short term is one year
Taxability of short term capital gain on shares and securities: - Section 111A of the income tax act 1961 provides that if the shares, bonds etc. are sold within 1 year to the purchase date, income derived from that sale will be treated as short term capital gain. The rate of income tax on short term capital gain on share is 10% up to assessment year 2008-09 and 15% from the assessment year 2009-10. The short term capital gains other than those u/s 111A shall be added to the income of the assesses and no such benefit is available on short term capital gains arising in other cases and they will be taxed normally at slab rates applicable to the assesses.
If someone does the business of selling and purchasing shares or securities, he/she can not take the advantage of Section 111A of the income tax act and the income of the assesses will be treated as ‘business income’ and will be taxed accordingly.
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