Page 335 - DCOM301_INCOME_TAX_LAWS_I

Income Tax Laws – I

Notes Capital gain of ` 1,00,000 as business income then you will be charged tax at rate of 30%
that will amount to ` 30,000 (Assuming you belong to highest Tax bracket) while the long
term capital gains from shares are exempted provided STT paid. Thus you may end up
paying extra tax.
Source: http://taxindia.pz10.com/2013/07/share-trading-income-business-gain-or.html

Self Assessment

Fill in the blanks:
1. …………………………..means any profit or gains arising from transfer of a capital asset.

2. ………………………….of the Act, provides that any profits or gains arising from the transfer
of a capital asset affected in the previous year shall be chargeable to income-tax under the
head Capital Gains.
3. If any Capital Asset is ………………………..the profits arising out of such sale are taxable
as capital gains in the year in which the transfer takes place.
4. Doubts may arise as to whether Capital Gains being a ………………………..can be brought
to tax as income.

12.2 Capital Asset

Unless the gain is relatable to a capital asset there can be no charge to capital gains tax. Section
2(14) of the Income-tax Act defines the term “capital asset” to mean:
Property of any kind held by an assessee whether or not connected with his business or profession
but does not include:
1. Any stock-in-trade, consumable stores or raw-materials held for the purposes of his
business or profession

2. Personal effects that is to say, movable property (including wearing apparel and furniture
but excluding jewellery) held for personal use by the assessee or any member of his
family dependent on him. Jewellery includes ornaments made of gold, silver, platinum or
any other precious metal or any alloy containing one or more of such precious metals,
whether or not containing any precious or semi-precious stone, and whether or not worked
or sewn into any wearing apparel and precious or semi-precious stones, whether or not
set in any furniture, utensil or other article or worked or sewn into any wearing apparel
3. Agricultural land in India, not being land situate (a) within the jurisdiction of a municipality
or a cantonment board and which has a population of not less than 10,000 according to the
last preceding census, or (b) in any area within such distance, not being more than eight
kilometres from the local limits of any Municipality or cantonment board, as the Central
Government may, having regard to the extent of any scope for urbanisation of that area
and other relevant considerations, specify in this behalf by notification in the Official
Gazette;
4. 6½ per cent Gold Bonds, 1977 or 7 per cent Gold Bonds, 1980 or National Defence Gold
Bonds, 1980 issued by the Central Government;
5. Special Bearer Bonds 1991 issued by the Central Government.
6. Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 notified by the Central
Government.

330 LOVELY PROFESSIONAL UNIVERSITY