Income under the Income tax act is classified into 5 heads, out of these 5 heads computation of income under capital gains requires the application of relevant rules relating to valuation, period of holding, ownership, etc. Capital gains are one of the areas where there are numerous issues giving rise to differences in the treatment of income between departments and the taxpayer. We help you to save tax on capital gains with prescribed investments and exemptions.
How is capital gain tax calculated?
Calculation of capital gain involves computation of sale consideration, cost of acquisition, expenses incurred in connection with the transfer or sale of the asset, and expenses incurred for the purchase of an asset. Indexation is applied in the case of certain long-term assets where the cost of acquisition is inflated to match the price effects of inflation. Once all these values are computed as per the rules, gross capital gain are arrived, the exemption or deduction available depending on the period of holding is reduced to arrive at net capital gains. Tax is now calculated at the relevant rates applicable for long-term or short-term capital gain for the relevant financial year.
Details required for capital gains return filing and tax savings?
- Sale deed, allotment letter, and contract note for getting details regarding purchase price, sale price, and calculation of the period of holding
- Details if investments made of proposed to be made for capital gains savings.
- Details of financial transactions relating to capital gains.
- Income tax login details.
- Details of other income.
- Details of the buyer in case of immovable property is transferred.