What is Capital Gain?

What is Capital Gain?

Gain on sale of following investment/assets is known as Capital Gain:

Shares

Units of a mutual fund

Bonds/debentures

Immovable property

Jewellery, paintings etc

What is Long term and Short Term Capital Gain?

When investments are held for more than 36 months, such gains are termed as Long Term Capital Gain. However, for shares, mutual funds, listed bonds & debentures, zero coupon bonds, the period is 12 months.

When investments held for less than36 months, such gains are termed as Short Term Capital Gain. However, for shares, mutual funds, listed bonds & debentures, zero coupon bonds, the period is 12 months.

 Am I required to pay any tax if I sell my shares after holding them for more than 1 year?

When you hold shares for more than 1 year, they become Long Term Capital Assets. Any profit earned is exempt from income tax, if the following conditions are fulfilled:

1. Such shares are sold through a recognized stock exchange.

2. Securities Transaction Tax (STT) has been paid on the sale of such shares.

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