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Capital Gains - How Computed [ U/s 48]

4.5.      CAPTIAL GAINS – HOW COMPUTED [SEC.48]

Computation of Capital Gain depends upon the nature of Capital Asset transferred , viz., Short-Term Capital Asset or Long-Term Capital Asset. The Tax incidence is generally higher in the case of Short-Term Capital Gain as compared to Long-Term Capital Gain.

The method of computation of Short-Term and Long-Term Capital Gain is as follows :

Computation of Short-Term Capital Gain

Computation of Long-Term Capital Asset

1.  Find out full value of consideration

2.  Deduct the following :
a.  expenditure incurred wholly and     exclusively in connection with such transfer
b.  Cost of acquisition
c.  Cost of improvement

3. From the resulting sum deduct the exemption provided by Sec. 54, 54B, 54D, 54EC, 54G, and 54 GA.

  1. The balancing amount is Short-Term    Capital Gain.

 

1. Find out full value of consideration

2. Deduct the following :
a.  expenditure incurred wholly and exclusively in connection with such transfer
b.  indexed cost of acquisition
c.  indexed cost of improvement

2.  From the resulting sum deduct the exemption provided by Sec 54, 54B, 54D, 54EC, 54G, and 54 GA.
3.  The balancing amount is Long-Term Capital Gain.

Note : No deduction will be allowed in respect of payments of Securities Transaction Tax (STT) in computing income under the head “Capital Gain”.

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