Income from capital gains
1.INTRODUCTION
When we buy any kind of property for a lower price and then subsequently sell it at a higher price, we make a gain. The gain on sale of a capital asset is called capital gain. This gain is not a regular income like salary, or house rent. It is a one-time gain; in other words the capital gain is not recurring, i.e., not occur again and again periodically.
Opposite of gain is called loss; therefore, there can be a loss under the head capital gain. We are not using the term capital loss, as it is incorrect. Capital Loss means the loss on account of destruction or damage of capital asset. Thus, whenever there is a loss on sale of any capital asset it will be termed as loss under the head capital gain.
Sections 45-551 of the Income Tax Act,1961 deal with the provisions of Income from
Capital Gains.
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1Bhargava,U.K.,Income Tax Act,1.303,(Taxmann Publications Pvt. Ltd.,2011)
3
2. BASIS OF CHARGE(Sec.45)
The capital gain is chargeable to income tax if the following conditions are satisfied: 1. There is a capital asset.
2. Assessee should transfer the capital asset.
3. Transfer2 of capital assets should take place during the previous year.
4. There should be gain or loss on account of such transfer of capital asset3.
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2Circular No. 2/2008,dated 22-2-2008
3See Taxmann’s Direct Taxes Manual,Vol.3
4
3.CAPITAL ASSET:Sec.2(14)
Any income profit or gains arising from the transfer of a capital asset is chargeable as capital gains. Now let us understand the meaning of capital asset.
Capital Asset means property of any kind, whether fixed or circulating, movable or immovable, tangible or intangible, held by the assesses, whether or not connected with his business or profession, but does not include, i.e.,
When we buy any kind of property for a lower price and then subsequently sell it at a higher price, we make a gain. The gain on sale of a capital asset is called capital gain. This gain is not a regular income like salary, or house rent. It is a one-time gain; in other words the capital gain is not recurring, i.e., not occur again and again periodically.
Opposite of gain is called loss; therefore, there can be a loss under the head capital gain. We are not using the term capital loss, as it is incorrect. Capital Loss means the loss on account of destruction or damage of capital asset. Thus, whenever there is a loss on sale of any capital asset it will be termed as loss under the head capital gain.
Sections 45-551 of the Income Tax Act,1961 deal with the provisions of Income from
Capital Gains.
__________________________________________________________________________________
1Bhargava,U.K.,Income Tax Act,1.303,(Taxmann Publications Pvt. Ltd.,2011)
3
2. BASIS OF CHARGE(Sec.45)
The capital gain is chargeable to income tax if the following conditions are satisfied: 1. There is a capital asset.
2. Assessee should transfer the capital asset.
3. Transfer2 of capital assets should take place during the previous year.
4. There should be gain or loss on account of such transfer of capital asset3.
__________________________________________________________________________________
2Circular No. 2/2008,dated 22-2-2008
3See Taxmann’s Direct Taxes Manual,Vol.3
4
3.CAPITAL ASSET:Sec.2(14)
Any income profit or gains arising from the transfer of a capital asset is chargeable as capital gains. Now let us understand the meaning of capital asset.
Capital Asset means property of any kind, whether fixed or circulating, movable or immovable, tangible or intangible, held by the assesses, whether or not connected with his business or profession, but does not include, i.e.,
Bibliography: 1. STATUTES: Relevant provisions of :The Income Tax Act, 1961