SHORT TERM CAPITAL GAINS FROM IMMOVABLE PROPERTY / OTHER ASSETS

Short Term Capital Gains [ STCG ] arising on sale of all movable assets and immovable properties other than shares and debentures of Indian Company and mutual funds are dealt almost at par with other taxable income in India . Brief features of tax treatment under the Income - Tax Act, 1961 [ I.T.Act ] are :

1.    Capital Gains - Meaning: 

.01   Profits and gains earned upon sale of any immovable or movable assets are taxed under the head of "Capital Gains" under the Income Tax Act, 1961.

.02  Capital Gain will arise at the time of transfer i.e. sale, exchange, partition of family, relinquishment etc.

.03  Such gains are classified as "Long Term Capital Gains (LTCG)" if the assets are held for a period of more than 24 months in case of Immovable property and 36 months in any other asset and as "Short Term Capital Gains (STCG) if held for lesser period.

2.    Capital Gains - Computation:

.01   STCG is calculated by deducting Cost of Acquisition and Cost of Improvement from Sale value of asset.

.02   Expenses which are incurred for transfer of capital asset is allowed as deductible expense.

3.    Tax Rates:

.01  STCG of other assets are taxed at normal rates of applicable tax on total income.

4.    Tax Exemptions;

.01  STCG of any asset does not qualify for any tax exemptions whatsoever.

 5.    Disadvantage NRIs:

.01  Non-Resident will be paying LTCG tax on gross amount of LTCG without benefit of basic exemption limit.

.02  And as such entire LTCG will be taxed at 20% subject to Indexation from the first Rupee gain

.03  STCG will be taxed at normal tax rates as applicable to the slab of net taxable Income.