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Gopika Juneja, Lovely Professional University
Unit 12: Income under the Head Capital Gains

Unit 12: Income under the Head Capital Gains Notes

CONTENTS
Objectives
Introduction

12.1 Capital Gains
12.2 Capital Asset
12.3 Concept of Transfer

12.3.1 Transactions which do not Constitute Transfer [Sections 46 and 47]
12.4 Short-term and Long-term Capital Gains
12.5 Computation and Deductions in Capital Gains
12.5.1 Cost of Acquisition
12.5.2 Cost of Improvement

12.5.3 Tax on Long-term Capital Gains (Section 112)
12.6 Capital Gains Exempt from Tax
12.7 Computation of Capital Gains in Respect of Depreciable Assets (Section 50)

12.8 Summary
12.9 Keywords
12.10 Review Questions
12.11 Further Readings

Objectives

After studying this unit, you will be able to:

Define Capital Gains and Capital asset
Discuss the Concept of Transfer

Describe Short-term and long-term capital gains
Workout Computation and deductions in Capital Gains
Explain Capital gains exempt from tax
Trace the Computation of capital gains in respect of depreciable assets

Introduction

When we buy any kind of property for a lower price and then subsequently sell it at a higher
price, we make a gain. The gain on sale of a capital asset is called capital gain. This gain is not a
regular income like salary, or house rent. It is a one-time gain; in other words the capital gain is
not recurring, i.e., not occur again and again periodically.
Opposite of gain is called loss; therefore, there can be a loss under the head capital gain. We are
not using the term capital loss, as it is incorrect. Capital Loss means the loss on account of

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