Exclusion & Inclusion of period
This query is : Resolved
03 October 2007
Plz clarify me the exclusion & inclusion of certian period for computing(captal gain) the period of holding of an asset.[Explanation 1(i) to sec 2(42A)].
Thanks
Thanks
03 October 2007
Plz clarify me the exclusion & inclusion of certian period for computing(captal gain) the period of holding of an asset.[Explanation 1(i) to sec 2(42A)].
Thanks
Thanks
04 October 2007
there are various cases where the period of holding is neccessary.
Capital gains are classified into long term and short term based on the period for which the asset was held. In the case of immovable property if the asset has been held by the assessee for more than 3 years it will be regarded as long term. In the case of shares the period of holding has to be only 12 months.
While short-term capital gains is taxed like any other income, special treatment is accorded to the long-term capital gains.
While computing long-term capital gains the cost inflation index can be applied and the gains are taxed at a flat rate of 20 per cent only.
Moreover, capital gain exemptions can be availed of by reinvesting the consideration subject to certain conditions such as:
In case property used for residence is sold, exemption can be claimed from capital gains if a new house is purchased within a period of1 year before or 2 years after the date of transfer or new house is constructed within 3 years.
In case of sale of assets other than a residential house exemption under Section 54F can be claimed if the net consideration is reinvested in purchase or construction of a new residential house within the prescribed period subject to conditions.
If the amount is not invested in a new house before the due date of filing of returns the amount should be invested in the capital gains account scheme of a Nationalized Bank. The amount can be drawn from the account and utilized subsequently within
the prescribed period.
Exemption from capital gains can also be availed by investing in specified bonds under section 54EC. In the case of capital gains arising during the financial year 2000-2001, this exemption is available on 3 years redeemable bonds issued by NABARD or by the National Highways Authority of India. In respect of capital gains arising on or after April 1, 2001, investment can be made in the bonds issued by Rural Electrification Corporation Ltd.
Exemption is available to the extent of capital gains invested. The investment has to be made within 6 months from the date of transfer.
Capital gains are classified into long term and short term based on the period for which the asset was held. In the case of immovable property if the asset has been held by the assessee for more than 3 years it will be regarded as long term. In the case of shares the period of holding has to be only 12 months.
While short-term capital gains is taxed like any other income, special treatment is accorded to the long-term capital gains.
While computing long-term capital gains the cost inflation index can be applied and the gains are taxed at a flat rate of 20 per cent only.
Moreover, capital gain exemptions can be availed of by reinvesting the consideration subject to certain conditions such as:
In case property used for residence is sold, exemption can be claimed from capital gains if a new house is purchased within a period of1 year before or 2 years after the date of transfer or new house is constructed within 3 years.
In case of sale of assets other than a residential house exemption under Section 54F can be claimed if the net consideration is reinvested in purchase or construction of a new residential house within the prescribed period subject to conditions.
If the amount is not invested in a new house before the due date of filing of returns the amount should be invested in the capital gains account scheme of a Nationalized Bank. The amount can be drawn from the account and utilized subsequently within
the prescribed period.
Exemption from capital gains can also be availed by investing in specified bonds under section 54EC. In the case of capital gains arising during the financial year 2000-2001, this exemption is available on 3 years redeemable bonds issued by NABARD or by the National Highways Authority of India. In respect of capital gains arising on or after April 1, 2001, investment can be made in the bonds issued by Rural Electrification Corporation Ltd.
Exemption is available to the extent of capital gains invested. The investment has to be made within 6 months from the date of transfer.
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