A capital asset includes:

• Property of any kind, whether movable or immovable, tangible or intangible (e.g., land, buildings, patents, trademarks).
• Assets such as stocks, bonds, mutual funds, and jewelry.
• It excludes items like personal goods (clothes, furniture, etc.), agricultural land in rural areas, and certain bonds notified by the government.

A long-term capital asset is an asset held by the taxpayer for more than:

• 24 months for immovable property (land, building, etc.), jewelry, and certain securities.
• 12 months for listed securities, units of equity mutual funds, and units of UTI.
• 36 months for other assets.

• LTCG arises from the transfer of a long-term capital asset.
• STCG arises from the transfer of a short-term capital asset (held for less than the above-specified periods).

The classification determines:

• The tax rate applicable: LTCG often enjoys concessional rates, while STCG is taxed at higher rates.
• The availability of indexation: Only LTCG can benefit from indexation, which adjusts the cost of acquisition for inflation.

LTCG = SaleConsideration − (IndexedCostofAcquisition + IndexedCostofImprovement + ExpensesonTransfer)

• Indexed Cost: The cost is adjusted for inflation using the Cost Inflation Index (CII) provided by the Income Tax Department.

Yes, for assets acquired before April 1, 2001, the taxpayer can:

• Use the actual cost of acquisition, or
• Use the fair market value (FMV) as of April 1, 2001, whichever is higher, as the cost of acquisition.

A transfer includes:

• Sale, exchange, or relinquishment of rights.
• Compulsory acquisition under any law.
• Conversion of a capital asset into stock-in-trade.
• Transactions involving ownership transfer through agreements.

Yes, some capital gains are exempt, such as:

• Gains from the transfer of agricultural land (subject to conditions).
• Gains arising from compensation for compulsory acquisition of certain assets.
• Gains on the sale of certain bonds and units notified under Section 10.

• LTCG: Typically taxed at 20% with indexation (10% without indexation for listed securities if exceeding ₹1 lakh).
• STCG: Taxed at the applicable income tax slab rate or 15% (on certain assets like listed securities).

Yes, Section 54 and related sections provide tax benefits if the capital gains are reinvested in specified assets, such as:

• Residential property (Section 54).
• Bonds under Section 54EC.

Yes, under Section 54EC, you can invest in bonds issued by:

• National Highway Authority of India (NHAI).
• Rural Electrification Corporation (REC). The investment must be made within 6 months of the transfer, with a maximum limit of ₹50 lakhs per financial year.

• Form C: For partial withdrawal.
• Form G: For closing the account.

• 1. File an application using Form G.
• 2. Get the endorsement from your Assessing Officer.
• 3. Submit the endorsed form to the bank for account closure.

• No capital gains tax applies to the transfer itself.
• The cost of acquisition for the recipient is considered as the cost incurred by the previous owner.