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Types of Capital Gains and Tax Rates in India

Capital Gains

To learn about when does capital gains arise, click here.

There are two types of capital assets depending upon their holding period:

  • Short term Capital Assets
  • Long term Capital Assets

Following is the type of capital asset and its period of holding to qualify as either ‘short-term capital asset’ or a ‘long-term capital asset’

Capital AssetsHolding period to qualify as Short-Term Capital AssetHolding period to qualify as Long-Term Capital Asset
Shares/ debentures of a company listed on a recognized stock exchange in India/ Zero coupon bond12 month or lessMore than 12 months
Units of equity oriented mutual funds/ UTIs (whether quoted or not)12 month or lessMore than 12 months
Shares of companies not listed on any stock exchange in India 24 month or lessMore than 24 months
Immovable property, being land or building or both (located in India or in Foreign country)24 month or lessMore than 24 months
Units of debt oriented mutual funds36 month or lessMore than 36 months
Units of Business trust36 month or lessMore than 36 months
Others36 month or lessMore than 36 months

Gains or losses on transfer of short term capital assets are termed as short-term capital gain/ loss and gains or losses on transfer of long term capital assets is termed as long term capital gain/ loss.

Tax Rate on Short-Term and Long-Term Capital Gains

ParticularsType of gainsRate of Tax
Sale of Equity shares or Units of equity-oriented Funds or Units of business trust (if STT is paid)Short term capital gain15%
Sale of Securities such as Preference shares, Debentures, Deep discount bonds, Units of mutual fundsShort term capital gainNormal Income Tax Slabs
Sale of Equity shares or Units of equity-oriented Funds or Units of business trust (if STT not paid)Short term capital gainNormal Income Tax Slabs
Any other type of AssetShort term capital gainNormal Income Tax Slabs
Zero coupon bondLong term capital gainLower of 20% after indexation or 10% without indexation
Listed debentures or BondsLong term capital gainLower of 20% after indexation or 10% without indexation
Listed equity shares sold other than through recognized stock exchangeLong term capital gainLower of 20% after indexation or 10% without indexation
Units of debt oriented mutual fundsLong term capital gain20%
Any other type of AssetLong term capital gain20%
Listed equity shares sold through recognized stock exchange, Equity oriented fund or units of business trust (if STT Paid)Long term capital gainUpto 1,00,000: Tax will be nil
Exceeding 1,00,000: Tax @10%

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