GET FAMILIAR WITH THE TERM CAPITAL GAINS

What is capital gain?

Capital gains are any profits and gains i.e. any income arising from the transfer of capital assets effected in the previous year shall be chargeable to income tax under the head capital gains in the previous year in which transfer took place.

Now, the question comes in the mind what is the capital asset?

Capital asset means property of any kind held by assessee whether or not connected with his business or profession but it excludes:-

1.  Stock in trade meant for assessee’s business or profession

2.  Personal effects, that is to say, movable property held for personal use by the assessee or by nay of his family member but again it excludes jewellery, archaeological collections, drawings, paintings, sculptures or any art of work

3.  Agricultural land in India situated in rural areas.

4.  Gold deposit bonds issued under the gold deposit scheme, 1999 notified by the central government

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SAVE INCOME TAX ON THE INCOME ARISING FROM SALE OF SHARES

If you have earned any income by way of sale of shares, you can save yourself from the tax implications. The income earned by way of sale of securities like shares, are subject to income tax but if you fulfill the conditions laid down in the section 10(38) of income tax act, 1965 you can save tax which ,may arise from the sale of shares

The conditions are as follows:

1.  The shares must be hold for more than 12 months

2.  Shares must be equity shares or unit of equity oriented fund

3.  Such transaction of sale must be entered into or after 01.04.2004

4.  Such transaction is chargeable to securities transaction tax

ANALYSIS

1.  This exemption is available to all assessee including foreign institutional investors and non residents

2.  Such shares must be held by assessee as capital assets not as stock in trade

3.  This exemption is available to equity shares or equity oriented units only

4.  It doesn’t cover securities like preference shares, debentures etc

If an assessee fulfills all the conditions as specified above, he can save his income so earned by way of sale of the above specified securities

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SALE SILVER AND STILL DOES NOT ATTRACT CAPITAL GAIN

If you have silver in any form and want to sell it but scared of attracting capital gain, you can save capital gain by selling silver in the form of silver utensils

With reference to the case of CIT Vs BENARSHILAL KATARIKA, the assessee sold the silver utensil and assessing officer was in the opinion that the selling of silver utensils are capital asset and hence capital gain would be attracted.

However, the high court held that silver utensils consisted of thalis, katoris, tumblers etc. which are meant for the personal use although they are not be used daily. Whether silver utensils constitute personal effects depend on the financial status of the assessee.

Therefore, silver utensil constitute personal affect and doesn’t constitute capital assets and hence it is not liable for capital gain

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GOLD DEPOSIT BONDS MAY BECOME YOUR KEY TAX SAVING INSTRUMENT

If you have gold idly lying with you and it is unable to generate any income except its incremental price, then you may opt for gold deposit bond.

Gold deposit bonds issued under gold deposit scheme, 1999 notified by central government is also an hot investment option for those investor who have investment in the form gold like in the form jewellery , gold bars, sovereigns etc

The key highlights of this scheme are as follows

1.  It provide annual interest of 2% p.a

2.  Interest earned on the bonds and capital gain arising from the transfer or redemption would be exempt from income tax

3.  Wealth is also not get attracted on these bonds

4.  It is easily redeemable at any point of time and more over redemption is on the fair market value prevailing in the market at the time of redemption

This option is opt by many users and they are taking the advantages of this scheme

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EARNED ANY CAPITAL GAIN???????

Have you earned any capital gain and you are planning to acquire any house property you may save tax implications arising due to capital gain

If you want to save tax implications, you may invest your money by acquiring house property in rural areas, this will not only save your tax on capital gain, more over when you will sell out that property you will not get attracted by any tax liability as consideration arising due to sale of any house property in rural areas is exempt from tax.

People invest in house property in rural areas like in the form of farm houses, the purpose is for investment you may use it for holidays purposes, you may visit these places just to relax your mind, as these places are free from fast life as in cities which is full of pollution whether in the form of air pollution or noise pollution, you will find immense pleasure and relax your nerves,

If you are planning to buy nay house property you may buy it in rural areas.

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DEPOSIT UNDER CAPITAL GAIN SCHEME AND SAVE TAX!!!!

DEPOSIT UNDER CAPITAL GAIN SCHEME AND SAVE TAX!!!!

WHEN ASSESSEE SELLS ANY PROPERTY WHICH MORE THAN THE VALUE OF INDEXED COST, THE RESULTANT WILL BE THE CAPITAL GAIN. THE CAPITAL GAIN SO EARNED WILL CHARGED TO INCOME TAX IN THE PREVIOUS YEAR IN WHICH PROPERTY IS TRANSFERRED.

THE ASSESSEE IS LIABLE TO PAY TAX ON THE CAPITAL GAI N HE EARNED FROM THE TRANFER OF PROPERTY AS PER TAX SLAB RATE OR THE SPECIFIED RATE AS THE CASE MAY BE, BUT IN ORDER TO SAVE THE CAPITAL GAIN TAX, THE ASSESSEE CAN DEPOSIT THE CAPITAL GAININ THE SPECIAL ACCOUNT KNOWN AS CAPITAL GAIN ACCOUNT SCHEME, THIS ACCOUNT MAY BE OPENED IN SPECIFIED BANKS.

THE AMOUNT SO DEPOSITED WILL NOT BE TAXABLE AS PER SECTION 54 OF INCOME TAX ACT, 1961. TO CLAIM THE BENEFIT OF TAX THE ASSESSEE SHOULD DEPOSIT THE CAPITAL GAIN WHICH WAS UNUTILISED BY ASSESSEE FOR THE PURCHASE OR CONSTRUCTION OF ANY PROPERTY, THE ASSESSEE HAVE OPTION WHETHER TO DEPOSIT THE SAID UNUTILISED AMOUNT IN LUMPSUM OR IN INSTALMENTS BUT HE SHOULD DEPOSIT THE SAME AMOUNT BEFORE FILING HIS RETURN OF INCOME.

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