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Capital Gains

Cap Gain Pie Chart

Under the Income Tax Act, any profits or gains arising from the transfer of a capital asset effected in the previous year, shall be chargeable to income tax under the head 'capital gains' and shall deemed to be the income of the previous year in which the transfer took place unless such capital gain is exempted under the prescribed exemptions. 'Capital gains' means any profit or gains arising from transfer of a capital asset. If any Capital Asset is sold or transferred, the profits arising out of such sale are taxable as capital gains in the year in which the transfer takes place. Capital gains is the difference between the price at which the capital asset was acquired and the price at which the same asset was sold. In technical terms, capital gain is the difference between the cost of acquisition and the fair market value on the date of sale or transfer of asset.

A capital gain is income derived from the sale of an investment. A capital investment can be a home, a farm, a ranch, a family business, or a work of art, for instance. In most years slightly less than half of taxable capital gains are realized on the sale of corporate stock.

What are capital assets?
Capital assets mean properties of any kind held by a person whether or not connected with his business or profession.

What are Long Term and Short Term capital assets?
Capital assets are classified as Long Term or Short Term with reference to the period of holding of the assets till it is transferred.

How is capital gain computed?
Subject to certain exceptions, capital gain is computed in the following manner :-
Capital Gain = ( Full value of consideration received or accrued on transfer of capital asset) - ( Cost of acquisition of capital assets ).

Hence if you have purchased a property for Rs 20,00,000 ten years back and now sell the property for Rs 80,00,000 then there is a capital gains of Rs 60,00,000 and there is a tax liability on the capital gains that you have made.

If you are a Non Resident Indian then most of the financial transactions will be net of taxes for capital gains tax, ie: suppose that you have purchased a equity mutual fund for Rs 1,00,000 and sold it for Rs 150,000 from your NRE or NRO account and hence had a capital gains of Rs 50,000 then the capital gains tax is deducted at source and you will receive Rs 50,000 less the tax amount. However in most cases for NRI's it is seen that they overpay taxes in India and they generally receive a refund of these taxes when they file their income tax returns.

Tax Assists professional consultants can provide you solutions from an individual's/organizational capital gains tax compliance requirements and filing of tax returns to getting a refund from the tax authorities.

We provide end-to-end service tax solutions, from accounting and filing of returns to day-to-day record keeping facility and maintaining books of accounts for individuals, NRI's, RNRI's, seafarers, businessmen, businesses and corporate houses. Your documents will be picked up from your doorstep and the finalized accounts delivered back. The auditing is also done in-house. 

All in all, we provide and end-to-end tax solutions as per your requirements.