Capital Gain Tax

When you sell an asset for more than its purchase price, the profit is called a capital gain, and it is taxable under the Income Tax Act 1961.

Capital gains are categorized based on how long the asset was held before selling.

Types of Capital Gains (India)

Short-Term Capital Gain (STCG)

• Holding period: Short duration (e.g., < 12 months for equities)
• Tax: Usually 15% for listed equity shares

Long-Term Capital Gain (LTCG)

• Holding period: Longer duration (e.g., > 12 months for equities)
• Tax: 10% above ₹1 lakh (without indexation) for listed equity

Common Assets Covered

• Shares and mutual funds
• Real estate (property)
• Gold and other investments

Why Capital Gain Tax Matters

• Impacts net investment returns
• Important for tax planning
• Influences buy/sell decisions

Capital Gain vs Income Tax

• Capital Gain Tax: On asset sale profits
• Income Tax: On regular income (salary, business)

"You buy shares for ₹1 lakh and sell them for ₹1.5 lakh: 👉 Capital Gain = ₹50,000 → Tax applicable"