The tax that is levied on this type of Capital Gain is called Capital Gains Tax. In Hindi it is called capital gains tax.
The country’s budget 2023-24 will be presented in the Lok Sabha in a few days. Everyone waits for the budget. Especially those who get affected with the budget announcements. Yes, some people are engrossed in doing their work and they do not care much about the announcements of the budget, but the large population of the country is influenced by the announcements of the budget every year and the budget is presented on the day i.e. February 1. Kindly keep an eye out. The most important thing that people keep in mind is whether there has been any change in the income tax limit. Along with many people, businessmen industry organizations who are knowledgeable about the economy are all expecting the government to increase the income tax exemption limit. Now the time is going on for investment, people are investing in different schemes through different mediums. In such a situation, tax is also levied on the returns received from investment and in such a situation, people are worried about seeing tax on their savings and hope that the government should give tax exemption or reduce it. Taxes on this type of investment are treated as capital gains separately from your income. The tax on this extra profit is called capital gains tax.
It is worth noting that while filing income tax return, it has to be kept in mind that, if someone has any kind of capital gains in the same financial year, then tax has to be paid on that too. But most people are not aware of this or they forget. Such people do not fill capital gains in ITR-1.
What is Capital Gains Tax?
To explain in simple language, let us tell you that Capital Gains Tax is such a tax which is charged on the profits arising from the sale of a capital asset. Generally, the sale price of such assets (Capital asset) is sold only when their purchase price is more and the profit from this is called Capital Gain. The tax that is applicable on this type of Capital Gain (Capital Gain) is only Capital Gains Tax They say. In Hindi it is called capital gains tax.
Generally a person buys land, plot, gold, shares, bonds, paintings, heritage car etc. All this is bought for own use or bought for investment. These are called capital assets. Since this is the type of investment, it is certain that there will be a time limit for the investment. It will remain lying like a capital. So this time frame has also been classified. For example, in terms of stock market, capital gains tax has also been tied in two time limits. One, for a period of less than 1 year. this tax short-term capital gains tax They say. That is, any capital asset (capital assets) on the profit made on its sale within a year, the tax on it short-term capital gains tax They say. Whereas, after a period of more than one year, the capital asset (capital assets ) the tax on the profit that is made on the sale long-term capital gains tax They say. Please tell that for some capital the long term is considered to be 3 years, for some it is 2 years and at some places it is even 1 year.
One thing to be understood is that not every salable item can be called a capital asset. Capital asset in the business sector is called such property, which has been purchased for use in that business. For example, understand that if a company buys computer or other goods for work, then that computer is a capital asset for it. But, similarly, if any other company buys computers to sell, then it is a goods inventory for it. In this place it is business and here income is income from business whereas in above calculation it is capital asset.
Short term capital gains tax on property
If you sell a property after keeping it for less than 3 years, then the profit from it is counted in Short Term Capital Gain. The tax levied on this is called Short term Capital Gains Tax. From the Financial Year 2017-18, the deals done within 2 years of fixed assets were brought under the short term limit. In the case of Shares, if sold within 1 year, the profit from it will be considered as Short Term Capital Gain. The tax levied on this will be called Short term Capital Gains Tax.
short term capital gains tax rate
Explain that the government does not declare any separate rate for tax on Short Term Capital Gain. It is added to the total income like any other income. Then the amount of tax on the total income has to be paid according to the tax slab. But if you have taken shares in the equity market, then short term capital gains tax has to be paid at the rate of 15 percent on the income from the purchase and sale of shares in the stock market within one year.
On the other hand, if you sell a property by keeping it for at least 3 years, then the profit from it is counted in Long Term Capital Gain. The tax levied on this is Long Term Capital Gain Tax. In the case of fixed assets like land, house etc., the government has reduced the period of Long Term Capital Gain to 2 years from the financial year 2017-18. Whereas, in case of movable assets like jewellery, bonds, debt mutual funds etc. it is only 3 years.
Generally, long-term capital gains are taxed at the rate of 20 percent. According to the amendment in the Finance Act, 2016, it can also be 10 percent in special cases. We will discuss in detail in the next article how much and how capital gains tax is levied.
It should be mentioned here that at present, for any type of tax calculation, do talk to a financial advisor.