“ The hardest thing to understand in the world is income tax”

These are the words of Albert Einstein, the world famous scientist and nobel prize holder. When one hears the term “tax”, one tends to visualize himself or herself going through pages and pages of complex calculations J. Of all the different type of taxes, today we will understand one of the complex ones-the capital gains tax. This is especially important, as the capital gains incurred on different assets like equity, gold, debt, property- all are taxed differently.

Capital gains are incurred on the sale of a capital asset.

Capital assets include real estate, bonds, stocks, gold, land, and even expensive sculptures and paintings.

Capital gains are classified as long term or short term based on the period of holding and the asset class, and are taxed at different rates based on the above mentioned classifications. The following table makes this clear.