0 70736 18841 presentation on capital gains cvk

8/22/2019 0 70736 18841 Presentation on Capital Gains Cvk

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Tax Implications

CAPITAL GAINS


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Computation Of Total Income

Income from Salaries $$$$

Income from House Property $$$$

Profits & Gains of Business/Profess. $$$$

Capital Gains (Sec 45) $$$$

Income from Other Sources $$$$


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CHARGEABILITY

Anyprofits or Gains arising from the transfer of a Capital Asset during the

previous year is Chargeable to Tax under this head of income.

That is to Say:-

There Should be a Capital Asset

Capital Assets should be transferred duringthe previous year.

Profit/Gains should have arisen.

Such Profit/Gains should be liable for tax.


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What are Capital Assets

It includes all type of assets Whether movable/immovable, tangible/intangible etc.,

It excludes the following:-

Stock in trade, consumable stores/rawmaterials held for business/profession.

Personal effects including wearing apparel

and furniture.Agricultural Land (Conditions on Situation

applies)

Certain Specified Gold Bonds Special Bearer Bonds

Gold Deposit Bonds


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Judicial points on what is taxable and what is not taxable.

Personal effects should be movable property, it should be held for personal useand it should not be Jewellary, archaeological collections, drawings, paintings,sculptures, or any work of art.

Gold and Silver coins and bars used for pooja of deities as a matter of pride orornamentation are not personal effects. Therefore taxable.

Furniture's are of personal use. Therefore not taxable. Foreign Stamp collections not a personal effect. Therefore taxable.

Car, Scooter etc., are under personal effects. Therefore exempted.

Securities, Loose diamonds, Goats are not personal effects. Therefore taxable.


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TYPES OF CAPITAL ASSETS

SHORT TERM

If the asset is held for Lessthan 36 Months then they are

Short Term capital assets.

In case of Equity/PreferenceShares in a Company,Securities such asDebentures/GovernmentSecurities and Units of UTI andUnits of Mutual funds and ZeroCoupon bonds the term is 12instead of 36 months.

LONG TERM

If the asset is held forMore than 36 Monthsthen they are Long TermCapital Assets.


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TAX LIABILITY

SHORT TERM CAPITAL GAINS

To determine the Value ofConsideration

To deduct expenditure incurred forthe transfer

To deduct the cost of acquisition. To deduct cost of improvement.

To avail exemption u/s 54 B, 54 D,54 G, and 54 GA.

The balance amount is Short TermCapital Gains.

Short Term Capital Gains arechargeable to Tax based on SLABRATES.

LONG TERM CAPITAL GAINS

To determine the Value ofConsideration

To deduct expenditure incurred forthe transfer.

To deduct indexed cost ofacquisition

To deduct indexed cost ofimprovement.

To avail exemption u/s 54, 54 B,54D, 54 EC, 54F, 54 G, 54 GA,

The balance amount is Long TermCapital Gains.

Long Term Capital Gains arechargeable to Tax on Flat Rate i.e20%


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INDEXATION BENEFIT

What is Indexation:-Indexation is nothing but working out the value ofasset based on cost inflation index.Cost inflation index for the year 1981-82 is 100 Cost

inflation index for the year 2007-08 is 551.

If an assessee had purchased an asset during theyear 81-82 for a sum of Rs.100.00. The same assetsvalue will be 551 if purchased during the year 2007-

08 based on cost inflation index.

Therefore the assessee gets additional benefit bydeducting 551 instead of 100.


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EXEMPTED CAPITAL GAINS

Section54

Section54 B

Section54 D

Transfer of a Long Term ResidentialHouse Property andPurchasing/Constructing a NewResidential House Property.

Transfer of Agricultural Land andacquires a new land for agriculturalpurpose.

Compulsory acquisition of land andbuildings forming part of industrialundertaking and again invested.


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Section54 EC

Section

54 F

Section54 G

Transfer of Long Term Capital Assetand investing in Long Term Bonds.

Transfer of a Long Term Capital Assetother than a House Property andinvesting in Long Term ResidentialHouse Property.

Transfer of Assets in shifting ofindustrial undertakings from urban areato rural area.


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Section54 GA

Capital Gains from Transfer of assetsin cases of Shifting of industrialundertaking from urban area to anyspecial economic zone


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0 70736 18841 presentation on capital gains cvk

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