Share |

How To Save Taxes On " Capital Gain "

Tax planning assumes a special role in the sale of capital assets. An income tax payer who knows the various provisions of Income Tax Law which go to reduce the incidence of income tax in relation to capital gains on the sale or otherwise transfer of a capital asset, would stand to benefit immensely.
Click..for More Details..

For the purposes of bringing to tax any gain under the head “capital gain”, the item transferred must be a capital asset. Hence its defmition becomes very important. As per Section 2(14) of the IT Act, 1961 it is defined as property of any kind held by an assessee whether or not connected with his business or profession, but not including:

Click..for More Details..

Broadly speaking, where a capital asset is held for a period of more than 3 years but more than 12 months in case of shares, units, securities traded on a stock exchange - any profit resulting from the transfer of the capital asset is regarded as long-term capital gain.

Click..for More Details..

As per Section 2(47) “transfer” in relation to a capital asset includes:

(i)      sale, exchange or relinquishment of the asset, or

(ii)     the extinguishment of any tight therein, or

(iii)    the compulsory acquisition thereof under any law, or


Click..for More Details..

Not every kind of transfer of a capital asset subjects the gains therefrom to capital gains tax. This is because there are certain kinds of transfers which are not regarded as covered under the charging Section 45 and consequently any capital gains made by an assessee as a result of transfer of a capital asset in those cases would be wholly exempt from tax.

Click..for More Details..

Several changes were made by the Finance Act, 1992 in the scheme of exemption and taxation of capital gains. However, there is no change in the scheme of the IT Act relating to the exemption in respect of long-term capital gain in house property.

Click..for More Details..

Another income tax exemption which can be enjoyed by an investor on investment in residential house property can be secured under Section 54F. Thus, where an investor has a long-term capital gain on the transfer of any capital asset (other than a residential house) like shares, a plot of land, commercial assets, commercial house property, jewdllery, etc.,

Click..for More Details..

Where the capital gains, both short-term and long-term, arise from the transfer of a capital asset, being land which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee or

Click..for More Details..

Under the provisions of Section 54D there is an exemption provided in the case of a person owning an industrial undertaking, whether land or building used by him for the purposes of business or the industrial undertaking is compulsorily acquired.

Click..for More Details..

The rates of long-term capital gains are contained in Section 112. Broadly speaking, the rate of income tax payable on long-term capital gains after taking into account both the indexed cost of improvement and indexed cost of acquisition under Section 48 would be

Click..for More Details..

Due to the application of Cost Inflation Index, there could be a loss under the head capital gains. The loss is explained in Illustration No. 2 and is allowed to be carried forward for set off against capital gains in future for a period of 8 years.

Click..for More Details..

Due to the new method of calculating the taxable long-term capital gains, there will be a change in the amount to be invested for getting complete exemption from income tax under Section 54.

Click..for More Details..

As per Section 54EC exemption in respect of long-term capital gains in the hands of any assessee is available on inveshment in certain bonds. Thus, this section would allow exemption from income tax in respect of long-term capital gains,

Click..for More Details..

Any income arising to a taxpayer on account of sale of long term capital asset being securities will be completely outside the purview of tax liability especially when the transaction of sale of such securities is entered into a recognised stock exchange in India.

Click..for More Details..

The Finance Act, 2002 had, with effect from the AY 2002, inserted a new Section 50C in the Income Tax Act, 1961, to make a special p2rovision for determining the full value of consideration in cases of transfer of immovable property.

Click..for More Details..
16 : Capital Gains On Compulsorily Acquired Agricultural Land

As per Section 10(37) of the Finance (No.2) Act, 2004 the capital gains arising on transfer of agricultural land (used for agricultural purposes by self or parent in the past 2 years) on compulsory acquisition would be outside the ambit of income Tax.

17 : Capital Gains On ESOP

Whenever the employee receiving shares, etc., as per the scheme of ESOP he is not required to make payment of any tax at the time of receipt of such shares, bonds or warrants. However, when the employee sells these shares, warrants or bonds, etc. received under ESOP plan, then at that point of time he would be called upon to pay capital gains. This capital gian could be either a short-term gain or a long-term gain depending on the period of holding such shares.

18 : Relief From Long-Term Capital Gains Tax On Transfer Of Residential Property If Invested In A Manufacturing Small Or Medium Enterprise

As per Section 54 GB if an individual or a Hindu Undivided Family on sale of a residential property invests the sale consideration in the equity of a new start-up SME company in the manufacturing sector and the said amount is utilized by the company for the purchase of new plant or machinery, then there would be no tax liability in respect of long-term capital gains. This is really a very good provision and would help the individuals to utilize the house property capital gains in certain productive business activity.

More Topics ...
5 Golden Rules Of Tax Planning
Deductions from Your Income
'Family Tax Planning'- More Income & Less Taxes
How To Save Income Tax through TAX Planning for A.Y. 2015-2016
How to Save Tax on Capital Gains
How to Save Tax on Income from House Property
How to Save Tax on Income from Other Sources
How to Save Taxes on Salary and Perquisites
Incomes Completely Exempt From Income Tax
Tax Exempt Incomes
Tax Planning through Hindu Undivided Family (HUF)
:: How These 8 Hot Tips can lead to Cool Tax Saving in Budget 2017
:: How to Pay Less Income Tax Post Budget 2017 and Beyond ....
:: Salient Features of Direct Tax Proposals in Union Budget 2017
:: New Tax Rates For FY 2017-18 & AY 2018-19 (Budget 2017)
:: TAX Benefit for Taxable Income in Budget 2017-2018
:: Point wise Summarise of Budget 2017
:: Key Features / Highlights of Budget 2017-2018
:: Important Points on Union Budget 2017
How is a Search Operation Conducted by Income Tax Department ?
The provisions relating to search and seizure are contained in section 132 of the Income Tax Act, 1961.
Sec. 143(3) : Scrutiny Assessments by Income Tax Department
Scrutiny assessment refers to the examination of a return of income by giving an opportunity to the assessee to substantiate the income declared and the expenses, deductions, losses, exemptions, etc. claimed in the return with the help of evidence..
“Penalties” Under Income Tax Act. 1956
Penalties by way of monetary payments are charged under the Income Tax Act for various defaults relating to payment of taxes, maintenance of accounts, for noncompliance and non co-operation during proceedings, for evasion of tax, etc..
Income of Individuals And HUFs – As a Tax Payers Under Income Tax Act, 1961.
The individual tax payers and also the HUFs while proceeding to calculate the net taxable income in the first phase are required to arrive at the gross total income under different heads of income...
Types Of Income Subject To TDS [Deduction Of Tax At Source]
The following types of incomes are mainly subject to deduction of tax at source: (a) Salaries Section 192. (b) Interest on securities Section 193..
Pre-Requisite For Claiming Income Tax Refund
For claiming income tax refund the first prerequisite is that there should have been excess tax paid or deducted at source on the basis of return of income.
Section-139(1) : Provision for Voluntary Income Tax Return
Every person,— (a) being a company or a firm; (whether having income or loss) or (b) being a person other than a company or a firm if his total income or the total ncome of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall file a return of his income in the prescribed form.
Benefits of Filing Income Tax Returnsn
We have heard many a times that every individual whose total income exceeds the maximum exemption limit is obligated to furnish his/her Income Tax Return or ITR.
Section-139(9): Defective Tax Return
Where the Assessing Officer considers that the return of income furnished by the assessee is defective, he may intimate the defect to the assessee and give him an opportunity to rectify the defect within a period of 15 days from the date of intimation.
Section 139(5) : Revised Income Tax Return
If any person, having furnished a return u/s 139(1), or in pursuance of a notice issued under section 142(1), discovers any omission or any wrong statement therein, he may furnish a revised return at any time.
Section-139(4A) : Income Tax Return of Charitable and Religious Trusts
Every person in receipt of income derived from property held under trust or other legal obligation wholly or partly for charitable or religious purposes or of income being voluntary contributions referred to in section 2(24)(iia) shall.
Section-139(4) : Belated Income Tax Return
If an assessee has not furnished a return of his income within the time allowed to him under section 139(1) or within the time allowed under a notice issued under section 142(1).
Get Updated ...
LIBRARY @ Tax Management
TAX & INVESTMENT GUIDE FOR "NRI"- Non-Resident Indians !
New Topics @ Tax KnowledgeBase...

Most Popular Topics :

Corporate Tax ( Taxation in Companies)
FAQ on TDS on Salaries
FAQ on Taxable Income
FAQ on Filing of Income Tax Return
Graphical Chat Presentation of Provision of Motor Car / Other Vehicles [Rule 3(2)(A)&(B)]
Tax Amendment at a Glance for Year 2015
'Appeals' Under Income Tax Act. 1961.
'Assessments' Under Income Tax Act. 1961.
List of Exempted Incomes (Tax-Free) Under Section-10
Income Under the Head ' Business and Professions' [Section 28 to 44]
Income Under the Head ' Capital Gain'
Income Under the Head ' House Property '[Section- 22 - 25 ]
Income Under the Head "Salary"
[Section 15-17]
Income Tax on 'Partnership Firms'
PENALTIES Under Income Tax Act. 1961.
Tax Saving Schemes for Individual for AY 2015-2016-Instant Guide
Income Tax Rates / Tax Slabs (AY-2014-2015 & 2015-2016)
"Exempted Incomes" under Income Tax Act.
Charitable & Religious Trust :Formation, Registration, & Taxation
Hindu Undivided Family [HUF] - Formation, Management and Taxation

Most Popular Links :

Clubing of Income Deduction U/s 80C
Allowances Us-17(3) Exemption-Salary
Tax Amendment-2015 Taxable Income
Clubing of Income Tax Deductions
HUF Deduction HUF Investment
Gift by HUF HUF Tax Planning Tips
Tax Saving Schemes Tax Planning Tips
Refund of Tax Fringe Benefit Tax-FBT
Return Filing Assessment / Scrutiny
Notice from I.T. Dept. Incomes Types @ TDS
Exemptions-Tax Returns “Summon” U/s 131
'Black Money' @ I.Tax Big Gifts To Be Taxed
'Appeals' under I.Tax Assessment @ I.Tax
Exempted Incomes Capital Gain
Business & Professions House Property
Salaries @ I.Tax Partnership Firm
'Penalty' under I.Tax Act. Tax Ready Reckoner
Charitable Trust Useful Links @ I.Tax
Guide & FAQ on Tax Knowledgebase @ Taxation Income Tax @ Glance HUF - Formation, Planning & Taxation
TRUSTs (Formation, Management & Taxation) NRI (Tax Planning,Saving,Investemnt) Budget 2017-2018  

All efforts are made to keep the content of this site correct and up-to-date. But, this site does not make any claim regarding the information provided on its pages as correct and up-to-date. The contents of this site cannot be treated or interpreted as a statement of law. In case, any loss or damage is caused to any person due to his/her treating or interpreting the contents of this site or any part thereof as correct, complete and up-to-date statement of law out of ignorance or otherwise, this site will not be liable in any manner whatsoever for such loss or damage.

The visitors may click here to visit the web site of Income Tax Department for resolving their doubts or for clarifications

Contact Us :

Mandal Bagicha, Hemkapada,
Sunhat, Balasore-756002 ( Odisha)
eMail ID :