Advertisements

Calculating your capital gains tax liability


Calculating Taxes Up And Down

 

 

“ 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.

Asset class

Period of holding

Type of Gain

Tax rate ( p.a)

 

Equity

Less than 1 year

Short term

15%

1 year and above

Long term

No tax

 

Debt

Less than 1 year

Short term

Added to annual income  and taxed as per individual slab.

1 year and above

Long term

10 % without indexation or 20 % with indexation whichever is lesser

 

Bonds

Less than 1 year

Short term

Added to annual income  and taxed as per individual slab.

1 year and above

Long term

10 % without indexation

 

Real Estate

Less than 3 years

Short term

Added to annual income  and taxed as per individual slab.

3 years and above

Long term

20 % with indexation

 

Gold-physical

Less than 3 years

Short term

Added to annual income  and taxed as per individual slab.

3 years and above

Long term

20% with indexation

 

Gold ETFs/MFs

Less than 1 year

Short term

Added to annual income  and taxed as per individual slab.

1 year and above

Long term

10 % without indexation or 20 % with indexation whichever is lesser
Advertisements

Have a query/an opinion/a comment to make? Would love to hear it !

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: