Capital Gain Under Income Tax– Gain arising on transfer of the capital asset is charged to tax under the head “Capital Gains”. Income from capital gains is classified as “Short Term Capital Gains” and “Long Term Capital Gains”. In this post, we will discuss the provision relating to the Capital Gain Tax Rate.
What is Capital Gain
Before proceeding for anything, first discuss “What is Capital Gain“.
Under Income Tax, Profit or gains arising from the transfer of capital assets are called “Capital Gain“. Capital Gain can be long-term or short-term.
What is Capital Gain Tax
On the Capital Gain arise, the taxpayers need to calculate tax which is called “Capital Gain Tax“. This Capital Gain Tax needs to be paid by the taxpayer at a specified rate, in the year in which the transfer of capital assets takes place.
What is Capital Gain Tax Rate
It is a rate at which tax on capital gain income is calculated. There are two capital gain rate for the calculation of tax-
- Long Term Capital Gain Tax Rate
- Short Term Capital Gain Tax Rate
Also Read- Capital Gain Indexation- Understand the Indexation under Income Tax and its chart
Long Term Capital Gain Tax Rate
Usually, the capital gain on long-term capital assets is calculated at a 20% rate + surcharge + cess as applicable. There are also some special cases under which an individual is charged at the rate of 10%, these include-
a) Long Term Capital Gain earned by selling listed securities of more than Rs. 1,00,000/-. It is in accordance with section 112A of the Income Tax Act.
b) Long Term Capital Gain arising on sale of any of the assets
- Any Security which is listed in a recognized stock exchange of India.
- Any unit of UTI or mutual fund** (whether listed or not) and,
- Zero-Coupon Bonds
** This option is available only in respect of units sold on or before 10.07.2014.
Also Read- Depreciation as per Income Tax Act- Complete list of Depreciation rate
Short Term Capital Gain Tax Rate
Usually, the capital gain on short-term capital assets is calculated at the rate of 15% + surcharge + cess as applicable or according to the slab rate applicable to the taxpayers. The chart below will show you the Capital Gain Tax for short-term capital assets.
| Condition | Rate of Tax |
|---|---|
| When transaction tax is based on securities | 15% (plus surcharge and cess as applicable). |
| In case where transaction tax is not based on securities | These STCGs are added in the income of the assessee and taxed according to the Income Tax Slab. |
Also Read- Understand the Meaning of Capital Assets for the purpose of Capital Gain
Chart for Capital Gain Tax Rate
| Capital Gain Type | Conditions | Rate of Tax |
|---|---|---|
| Long Term Capital Gains Tax | Except on Sale of equity share/units of Equity Oriented Fund | 20% |
| Long Term Capital Gains Tax | On Sale of equity share/units of Equity Oriented Fund | 10% over and above Rs. 1 Lakh |
| Short Term Capital Gains Tax | When security transaction tax is not applicable | These STCGs are added in the income of the assessee and taxed according to the Income Tax Slab. |
| Short Term Capital Gains Tax | When Security Transaction Tax is Applicable | 15% |
Frequently Asked Questions- FAQs
-
What is the Short Term Capital Gain Tax Rate for 2021?
Usually, the capital gain on short-term capital assets is calculated at the rate of 15% + surcharge + cess as applicable or according to the slab rate applicable to the taxpayers.
-
What is Capital Gain in Income Tax?
Gain arising on transfer of the capital asset is charged to tax under the head “Capital Gains”. Income from capital gains is classified as “Short Term Capital Gains” and “Long Term Capital Gains”
On the Capital Gain arise, the taxpayers need to calculate tax which is called “Capital Gain Tax“. This Capital Gain Tax needs to be paid by the taxpayer at a specified rate, in the year in which the transfer of capital assets takes place.
-
What is the Long Term Capital Gain Tax Rate for 2021?
Usually, the capital gain on long-term capital assets is calculated at a 20% rate + surcharge + cess as applicable. There are also some special cases under which an individual is charged at the rate of 10%, these include-
a) Long Term Capital Gain earned by selling listed securities of more than Rs. 1,00,000/-. It is in accordance with section 112A of the Income Tax Act.
b) Long Term Capital Gain arising on sale of any of the assets
Any Security which is listed in a recognized stock exchange of India.
Any unit of UTI or mutual fund** (whether listed or not) and,
Zero-Coupon Bonds** This option is available only in respect of units sold on or before 10.07.2014.
Join our Social Community
Disclaimer: The information contained in the above article are solely for informational purpose after exercising due care. However, it does not constitute professional advice or a formal recommendation. The author does not own any responsibility for any loss or damage caused to any person, directly or indirectly, for any action taken on the basis of the above article.
Feedback/Suggestion- Hope you all find it useful, please give your valuable feedback & let us know if there is an error. Thanks in Advance
Compiled by- CA Chirag Agarwal (Practicing Chartered Accountants)