Capital gains tax exemption in India 2012-2013 ?   According to Income tax Act ,1961 , Capital Gains are tax exempted u/s 54EC of Income.  The concept of Capital gains is vast and before knowing about tax exemption on capital gains, its very crucial to know what all come under capital gains and what not. Capital gains is also needs to be considered when calculating Total Income Tax.  People often treat only the salary as income tax component during tax calculation. But if you want to calculate income tax you have to consider 1. Salaries 2.  Income from House Property 3. Profits from Business 4.  Capital Gains 5. Income from Other Sources( Shares).

So when you calculate income tax your Total Income will be [ 1 +2 +3+ 4+5 ] and Taxable Income will be [Total Income]  – Income tax exemptions or Reliefs (if Any).

Understanding Capital Gains and what all you need to consider when you compute Capital Gains ?  What is Capital asset ? The Below mentioned items are considered to Capital Assets.

  1. Income from Stocks/Shares
  2. Personal Things like jewelry, Motor Vehicles and Furniture
  3. Any income made by selling paintings, Drawings and Sculptures
  4. Income Made from Agriculture or Agricultural Lands.(Please see Annexure ‘A’ for the notification).
  5. Any income from Gold Bonds.

Transfer of a short term capital asset gives rise to ‘Short Term Capital Gains’ (STCG) and transfer of a long term capital asset gives rise to ‘Long Term Capital Gains’ (LTCG). Its very important to identify gains as STCG and LTCG  in computing the income under the head Capital Gains as method of computation of gains and tax payable on the gains and treatment of losses is different for STCG and LTCG. I request you refer this PDF document to understand completely about Capital Gains. If you like to add or have any concerns with the information , please comment I will add to this post.

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