INCOME FROM CAPITAL GAINS

TAX ASPECTS OF BUSINESS

Presented To

Prof. A. Balasubramaniam

Presented By

Name Roll No.

Trushank Chavan 07

Shankar Gajare 17

Deepak Patil 42

Rohan Rane 49

Anushri Raut 50

2Capital Gain

Basis of Charge Profit or gain arising from the transfer of capital

assets during previous year is chargeable under the head capital gains if following conditions are full filed;

Their should be capital Assets.

Their should be transfer of capital assets.

Transfer should take place in previous year.

Their should be profit or gains.

Any Income derived from a Capital asset movable or immovable is taxable under the head Capital Gains under Income Tax Act 1961.

3There must be a Capital Asset [S.2(14)]

Capital assets is defined to mean propety of any kind, held by the assesse, whether or not connected with his business or profession.

Property may be tangible or intangible.

Land, buildings, vehicles, goodwill, tenancy rights, leasehold rights, licences, patents, trademarks, etc. are some examples of capital assets

4Capital Assets must be transferred [S.2(47)]

The sale, exchange or relinquishment of the asset;

The extinguishment of any rights therein;

The compulsory acquisition of any capital assets by the government;

Conversion of capital assets into stock in trade.

5Types of Capital Assets There are two types of capital assets;

Short Term Capital Gains: It means a capital assets held by an assesse for not more than 36 months immediately prior to its date of transfer. Tax is calculated as per Income Tax Act.

Long Term Capital Gains : A Asset is not a short term capital gain is long term capital gain. 20 % is taxable.

6Computation of STCG

Full value of ConsiderationXXX

Less: Cost of acquisitionXXX

Less: Cost of improvementXXX

Short Term Capital GainXXX

Less: Exemption U/S 52(B), 54(D) & 54(G)XXX

Net Short Term Capital GainXXX

7Computation of LTCG

Full value of Consideration XXX

Less: Cost of acquisitionXXX

Less: Cost of improvement XXX

Short Term Capital GainXXX

Less: Exemption U/S 54 – 54(H) XXX

Net Short Term Capital GainXXX

8Meaning Full Value Consideration : It means what the transferor

or is entitled to receive as consideration for the sale of property/Asset. This Value may be in cash or in kind i.e. in exchange for an asset.

Cost of Acquisition : It is the price which the assesse has paid or the amount which the assesse has incurred for acquiring the property/Asset.

Cost of Improvement : It is capital expenditure incurred by am assesse in making any addition/Improvements to the capital asset.

9Indexed Cost of Acquisition

ICOA : Cost of Acquisition*Cost of the year in which asset is transferred.

Cost inflation index of the first year in which asset was first hold by the assesse or Cost inflation index of the year beginning on 1st april,1981.(which Every is later)

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Indexed cost of Investment

ICOI : Cost of Acquisition* Cost Inflation Index of the year in which asset is transferred.

Cost inflation index of the year in which improvement took place.

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Sum

X Transfers Gold on 10th May, 2011 Rs 3655000.

Expenses on Trasfer Rs 55000.

Gold purchased on 23rd June, 1982 Rs 3 Lakhs to get benefit u/s 54(F).

X Purchases house property on 12th May, 2011 Rs 27 Lakhs at pune.

Mr X Transfers pune property on 29th June, 2013 For Rs 30 Lakhs.

Find out Capital gain chargeable to tax. Cost of investment for period 1982 is 109 & 2011-12 is 785.

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SolutionSales Consideration 3655000.0

Less: Expenses 55000.0

3600000.0

Less: Index Cost Of Acquisition

1982 & 2011-12 is 109 & 785 respectively

(300000*785/109) 2160550.0

1439450.0

Less: Exemption U/S 54(F)

(2700000/3600000*1439450)1079587.5

Income Under head Capital Gain 359862.5

THANK YOU