Meaning
Any profit or gain arising from the transfer of any capital asset is called capital gains.
Essential conditions
- There must be a capital asset
- The assessee transfers such capital asset
- There must be profit or gain on such transfer
Basis of charge
This income is chargeable to tax in the previous year in which the transfer took place. In some cases, it is taxable in the previous year in which consideration is received (e.g. compulsory acquisition by the Government.
Any property (fixed or circulating, movable or immovable, tangible or intangible) held by an assessee, whether or not connected with his business or profession, but excluding the following:
Capital Asset
- Stock-in-trade, consumable stores, or raw materials held for the purpose of business or profession.
- Personal effect: Any movable property held for personal use (i.e. refrigerator, furniture, motor car, electric appliances, wearing apparel etc.) but excludes jewellery (ornaments made of gold, silver, platinum etc.), archaeological collections, drawings, paintings, sculptures or any work of art.
- Agricultural land in a rural area in India
- 6½% gold bond,1977, 7% Gold Bond,1980, National Defence Gold Bond,1980, special Bearer Bond, 1991 issued by the Central Govt., Gold deposit Bonds.