Capital Gains Tax (CGT) is a tax levied on the profit arising from the sale of a capital asset (like land, buildings, shares, jewellery, patents).

Types

  • Short-term CGT:
    • Any asset that is held for less than 36 months is termed a short-term asset.
    • In the case of immovable properties, the duration is 24 months.
    • The profits generated through the sale of such an asset would be treated as short-term capital gain and would be taxed accordingly.
  • Long-term CGT:
    • Any asset that is held for over 36 months is termed a long-term asset.
    • Assets like preference shares, equities, UTI units, securities, equity-based Mutual Funds, and zero-coupon bonds are also considered long-term capital assets if they are held for over a year.
    • LTCG on listed equity up to ₹1.25 lakh is exempt per Union Budget 2024-25

Fact To Note

  • Such taxes are levied when an asset is transferred between owners.
  • This tax applies to both individuals and businesses.

 

Source: The Hindu