Difference between Short term and Long term capital gains

Capital gains definition:

Difference between Short term and Long term capital gains
Difference between Short term and Long term capital gains

Capital gains are of 2 types:

Short term capital gains and Long term capital gains

Short term capital gains for different types of capital assets:

Such type of deals are closed in a short time like:

Type of Capital assetsTime duration of deal closing (Buy to Sell)
Equity Shares : Listed at Exchange< 12 months
Equity Shares : Un-Listed< 24 months
Equity oriented Mutual fund< 12 months
Debentures and Government securities< 12 months
Immovable Property (land / house / building)< 24 months
Jewellery (Gold, Silver, Platinum, precious metal or alloy)< 36 months
Any other capital asset except Agricultural Land< 36 months
Short term capital gain for dfferent types of capital assets

Long term capital gains for different types of capital assets:

Such type of deals are closed in a time duration like:

Type of Capital assetsTime duration of deal closing (Buy to Sell)
Equity Shares : Listed at Exchange> 12 months
Equity Shares : Un-Listed> 24 months
Equity oriented Mutual fund> 12 months
Debentures and Government securities> 12 months
Immovable Property (land / house / building)> 24 months
Jewellery (Gold, Silver, Platinum, precious metal or alloy)> 36 months
Any other capital asset except Agricultural Land> 36 months
Long term capital gain for dfferent types of capital assets

Short Term capital gains calculation for income tax purpose :

Sale Valuexxxx
Less : Commission, brokerage etc.(xxxx)
Net Sale Valuexxxx
Less: Buy value(xxxx)
Less : Expenditures on property for improvement(xxxx)
Short term capital gainsxxxx
Short Term capital gains calculation for income tax purpose

Example of Short Term capital gains calculation:

Ram, a salaried employee, in November 2019 purchased Gold worth Rs. 720,000 and sold in July 2022 for Rs. 900,000. To sale the gold, he paid Rs. 20,000 as brokerage. What will be the taxable capital gains?

Since the difference between sale and buy is less than 36 months for Gold, so short term gains will be applicable here. Now, we’ll calculate that short term capital gains below:

Sale Value of gold900,000
Less : Commission, brokerage etc.– 20,000
Net Sale Value880,000
Less: Buy value– 720,000
Less : Expenditures on property for improvementNil
Short term capital gains160,000
Short Term capital gain calculation for income tax purpose

Income Tax rates on Short term capital gains:

There are 2 types of income tax rates on Short term capital gains:

STCG covered under section 111A of Income tax actSTCG Not-covered under section 111A of Income tax act
Applicable to sale of 1. Equity share listed
2. Equity oriented Mutual Fund (65% allocation to equities)
3. Units of business trust
4. Transaction done on a recognised stock exchange
1. preference shares, Zero coupon bonds
2. Un-listed shares
3. Debentures, Bonds and Government securities
4. Debt oriented (Non-equity) mutual fund
5. Immovable property, Gold, Silver, etc
Income Tax Rates15% (plus surcharge and cess)As per normal Tax rate slabs depending on the total income and age
Adjustment of STCG against the basic exemption limit by

(1. Exemption limit for residents < 60 years – 250,000
2. Exemption limit for residents of 60 to 80 years – 300,000
3. Exemption limit for residents > 80 years – 500,000)
4. Exemption limit for non-residents of any age – 250,000)
Resident Individual and Resident HUF can only adjust STCG against basic exemption limit.Non-Resident Individual and Non-Resident HUF cannot adjust STCG against basic exemption limit..
Deductions under section 80C to 80U from STCGDeduction under sections 80C to 80U is not allowed from the income in a financial year.Deduction under sections 80C to 80U is allowed here from the income in a financial year.
Income Tax rates on Short term capital gains

Income Tax rates on Long term capital gains:

Long term capital gains is under Section 112A of Income Tax Act.

On equity share sale10% (over Rs. 1 lakh profit)
On equity-oriented mutual fund sale10% (over Rs. 1 lakh profit)
On Non-equity shares or Non-equity mutual fund20% with indexation
On Immovable property like, land, building, flat etc.20% with indexation
Income Tax rates on Long term capital gains

Kindly verify from official website before making a decision

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