Description
A capital gain is a profit that results from a disposition of a capital asset, such as stock, bond or real estate, where the amount realized on the disposition exceeds the purchase price. The gain is the difference between a higher selling price and a lower purchase price
CAPITAL GAINS
Computation Of Total Income
? Income from Salaries
xxxx ? Income from House Property xxxx ? Profits & Gains of Business/Profess. xxxx ? Capital Gains (Sec 45) xxxx ? Income from Other Sources xxxx
CHARGEABILITY
Any profits or Gains arising from the transfer of a Capital Asset during the previous year is Chargeable to Tax under this head of income. Conditions
? There Should be a Capital Asset
? Capital Assets should be transferred during the
previous year. ? Profit/Gains should have arisen. ? Such Profit/Gains should be liable for tax.
What are Capital Assets? It includes all type of assets Whether movable/immovable, tangible/intangible etc., It excludes the following:? Stock in trade, consumable stores/raw materials held
for business/profession. ? Personal effects including wearing apparel and furniture. it should be held for personal use and it should not be
Jewellary, archaeological collections, drawings, paintings, sculptures, or any work of art
? Agricultural Land (Conditions on Situation applies) ? Certain Specified Gold Bonds ? Special Bearer Bonds ? Gold Deposit Bonds
TYPES OF CAPITAL ASSETS
? SHORT TERM
? LONG TERM
If the asset is held for Less than
36 Months then they are Short Term capital assets.
If the asset is held for More than 36 Months then they are Long Term Capital Assets.
In case of Equity/Preference Shares in a Company, Securities such as Debentures/Government Securities and Units of UTI and Units of Mutual funds and Zero Coupon bonds the term is 12 instead of 36 months.
TAX Computation
? SHORT TERM CAPITAL
GAINS
? determine the Value of ? ? ? ?
? LONG TERM CAPITAL
GAINS
? determine the Value of
? ? ? ? ? ?
?
?
Consideration deduct expenditure incurred for the transfer deduct the cost of acquisition. deduct cost of improvement. avail exemption u/s 54 B, 54 D, 54 G. The balance amount is Short Term Capital Gains. Short Term Capital Gains are chargeable to Tax based on SLAB RATES.
Consideration deduct expenditure incurred for the transfer. deduct indexed cost of acquisition deduct indexed cost of improvement. avail exemption u/s 54, 54 B,54 D, 54 EC, 54F, 54 G The balance amount is Long Term Capital Gains. Long Term Capital Gains are chargeable to Tax on Flat Rate i.e 20%
INDEXATION BENEFIT
? What is Indexation:-
Indexation is nothing but working out the value of asset based on cost inflation index. Cost inflation index for the year 1981-82 is 100 Cost inflation index for the year 2008-09 is 582.
If an assessee had purchased an asset during the year 81-82 for a sum of Rs.100.00. The same asset’s value will be 582f purchased during the year 2008-09 based on cost inflation index.
Therefore the assessee gets additional benefit by deducting 582 instead of 100.
EXEMPTED CAPITAL GAINS
? Section ? Transfer of a Long Term Residential
54
? Section
54 B
? Section
House Property and Purchasing/Constructing a New Residential House Property. ? Transfer of Agricultural Land and acquires a new land for agricultural purpose.
? Compulsory acquisition of land and
54 D
buildings forming part of industrial undertaking and again invested.
EXEMPTED CAPITAL GAINS
? Section
54 EC
? Transfer of Long Term Capital Asset and
investing in specified Long Term Bonds.(National Highway Authority of India Bonds or Rural Electrification Corporation Ltd.Bonds)
? Transfer of a Long Term Capital Asset
? Section
54 F
other than a House Property and investing in Long Term Residential House Property.
? Transfer of Assets in shifting of industrial
? Section
54 G
undertakings from urban area to rural area.
EXEMPTED CAPITAL GAINS
? Section ? Capital Gains from Transfer of assets in
54 GA
cases of Shifting of industrial undertaking from urban area to any special economic zone
? Problems? 1. Mr.Ravi has purchased a house in F.Y.1983-84(Cost inflation
Index is 116) for Rs.3Lakhs and sold it in F.Y.08-09 for Rs. 20 lakhs. ? Compute the Long term Capital Gain for Mr.Ravi A.Y.09-10.
? Answer: ? Sales Consideration ? Less-Indexed Cost of acquisition
20,00,000
(3,00,000*582/116)
? Long Term Capital Gain
15,05,172
4,94,828
? Problems? 1. Mr.Kavi has purchased a house on 23rd June-06(Cost inflation
Index is 519) for Rs.3Lakhs and sold it in 07th March-09 for Rs. 10 lakhs. During 07-08 he has constructed a 2nd floor for Rs. 1 Lakh. ? Compute the Short term Capital Gain for Mr.Kavi A.Y.09-10.
? ? ? ?
Answer: Sales Consideration Less-Cost of acquisition Less-Cost of improvement
10,00,000 03,00,000 01,00,000
? Short Term Capital Gain
6,00,000
doc_532064868.ppt
A capital gain is a profit that results from a disposition of a capital asset, such as stock, bond or real estate, where the amount realized on the disposition exceeds the purchase price. The gain is the difference between a higher selling price and a lower purchase price
CAPITAL GAINS
Computation Of Total Income
? Income from Salaries
xxxx ? Income from House Property xxxx ? Profits & Gains of Business/Profess. xxxx ? Capital Gains (Sec 45) xxxx ? Income from Other Sources xxxx
CHARGEABILITY
Any profits or Gains arising from the transfer of a Capital Asset during the previous year is Chargeable to Tax under this head of income. Conditions
? There Should be a Capital Asset
? Capital Assets should be transferred during the
previous year. ? Profit/Gains should have arisen. ? Such Profit/Gains should be liable for tax.
What are Capital Assets? It includes all type of assets Whether movable/immovable, tangible/intangible etc., It excludes the following:? Stock in trade, consumable stores/raw materials held
for business/profession. ? Personal effects including wearing apparel and furniture. it should be held for personal use and it should not be
Jewellary, archaeological collections, drawings, paintings, sculptures, or any work of art
? Agricultural Land (Conditions on Situation applies) ? Certain Specified Gold Bonds ? Special Bearer Bonds ? Gold Deposit Bonds
TYPES OF CAPITAL ASSETS
? SHORT TERM
? LONG TERM
If the asset is held for Less than
36 Months then they are Short Term capital assets.
If the asset is held for More than 36 Months then they are Long Term Capital Assets.
In case of Equity/Preference Shares in a Company, Securities such as Debentures/Government Securities and Units of UTI and Units of Mutual funds and Zero Coupon bonds the term is 12 instead of 36 months.
TAX Computation
? SHORT TERM CAPITAL
GAINS
? determine the Value of ? ? ? ?
? LONG TERM CAPITAL
GAINS
? determine the Value of
? ? ? ? ? ?
?
?
Consideration deduct expenditure incurred for the transfer deduct the cost of acquisition. deduct cost of improvement. avail exemption u/s 54 B, 54 D, 54 G. The balance amount is Short Term Capital Gains. Short Term Capital Gains are chargeable to Tax based on SLAB RATES.
Consideration deduct expenditure incurred for the transfer. deduct indexed cost of acquisition deduct indexed cost of improvement. avail exemption u/s 54, 54 B,54 D, 54 EC, 54F, 54 G The balance amount is Long Term Capital Gains. Long Term Capital Gains are chargeable to Tax on Flat Rate i.e 20%
INDEXATION BENEFIT
? What is Indexation:-
Indexation is nothing but working out the value of asset based on cost inflation index. Cost inflation index for the year 1981-82 is 100 Cost inflation index for the year 2008-09 is 582.
If an assessee had purchased an asset during the year 81-82 for a sum of Rs.100.00. The same asset’s value will be 582f purchased during the year 2008-09 based on cost inflation index.
Therefore the assessee gets additional benefit by deducting 582 instead of 100.
EXEMPTED CAPITAL GAINS
? Section ? Transfer of a Long Term Residential
54
? Section
54 B
? Section
House Property and Purchasing/Constructing a New Residential House Property. ? Transfer of Agricultural Land and acquires a new land for agricultural purpose.
? Compulsory acquisition of land and
54 D
buildings forming part of industrial undertaking and again invested.
EXEMPTED CAPITAL GAINS
? Section
54 EC
? Transfer of Long Term Capital Asset and
investing in specified Long Term Bonds.(National Highway Authority of India Bonds or Rural Electrification Corporation Ltd.Bonds)
? Transfer of a Long Term Capital Asset
? Section
54 F
other than a House Property and investing in Long Term Residential House Property.
? Transfer of Assets in shifting of industrial
? Section
54 G
undertakings from urban area to rural area.
EXEMPTED CAPITAL GAINS
? Section ? Capital Gains from Transfer of assets in
54 GA
cases of Shifting of industrial undertaking from urban area to any special economic zone
? Problems? 1. Mr.Ravi has purchased a house in F.Y.1983-84(Cost inflation
Index is 116) for Rs.3Lakhs and sold it in F.Y.08-09 for Rs. 20 lakhs. ? Compute the Long term Capital Gain for Mr.Ravi A.Y.09-10.
? Answer: ? Sales Consideration ? Less-Indexed Cost of acquisition
20,00,000
(3,00,000*582/116)
? Long Term Capital Gain
15,05,172
4,94,828
? Problems? 1. Mr.Kavi has purchased a house on 23rd June-06(Cost inflation
Index is 519) for Rs.3Lakhs and sold it in 07th March-09 for Rs. 10 lakhs. During 07-08 he has constructed a 2nd floor for Rs. 1 Lakh. ? Compute the Short term Capital Gain for Mr.Kavi A.Y.09-10.
? ? ? ?
Answer: Sales Consideration Less-Cost of acquisition Less-Cost of improvement
10,00,000 03,00,000 01,00,000
? Short Term Capital Gain
6,00,000
doc_532064868.ppt