Capital Gain | LTCG| STCG

Simply say, all the gains which are of capital nature is considered as capital gains. The computations of which goes under the head "Income from Capital Gain" in Income Tax. Now the question arises which gains are to be considered as Capital gains? So that depends upon the nature of the transaction i.e nature of the asset which has been sold whether it was of capital nature or not. So capital asset are those which are related or belongs to the assessee whether or not connected to his business or profession. But it is to be noted that following things are excluded from the nature of being "capital" which are as follows:

1. Personal Movable Assets 

2. Rural Agricultural Land in India

3. Stock In Trade

4. Gold Deposit Bonds 

But there are some exceptions to the above mentioned. It means following assets are included in the nature of being "capital" which are as follows:

1. Jewellery

2. Archeological Collections

3. Sculptures

4. Paintings

5. Any Work of Art

I hope that now you understand the meaning of Capital asset. So, the profit on sale of capital asset results in capital gain.

Now the Capital gain has been divided in two parts on the basis of time period for which that asset was hold the assessee. These are termed as:

1. Short Term Capital Gain

2. Long term Capital Gain

          

Short Term Capital Gain: If the asset was hold by the assessee for a period of 36 months or less then it is to be considered as short term asset and the profit on the sale of same will be considered as Short Term Capital Gain(STCG). 

Long term Capital Gain: However this goes in the opposite direction that means if the asset was hold by the assessee for a period of 36 months or more then it is to be considered as long term asset and profit on the sale of the same will be considered as Long Term Capital Gain(LTCG)

However there are also some exceptions which are as follows:

1. If there is any 

- Listed shares or debentures in India

- Units of UTI or Equity oriented mutual funds

- Zero coupon bonds

hold for 12 months or less then only it will be considered as short term otherwise these will also considered as long term.

2.If there is any 

- Unlisted shares or debentures 

- Immovable property

hold for 24 months months or less then only it will be considered as short term otherwise these will also considered as long term.

So that was all about Capital asset and Capital gain. Hope you understand.

Thank You!