How can I calculate my capital gains?

Capital gains tax calculator

Hello,,Capital Gain is the profit or gain that arises when you sell a Capital Asset.

If you sell a Long Term Capital Asset, you will have Long Term Capital Gain and if you sell a Short Term Capital Asset, you will have a Short Term Capital Gain.

If the result from sell is negative, you will have a capital loss.

The Capital Gain will be chargeable to tax in the year in which the transfer of Capital Asset takes place.

,Calculation of Capital Gains is different in case of Long Term Capital Assets and Short Term Capital Assets.

Following are some of the important terms you need to understand before understanding the method of calculation:,Full Value of Consideration: It is the amount received or to be received by the seller when he sells (transfers) the asset to the buyer.

Capital Gain will be chargeable in the year in which the asset is transferred, even though consideration is received later on.

,Cost of Acquisition: It is the purchase price at which the seller acquired the asset.

,Cost of Improvement: It is an expense that is incurred to make any improvements or repairs or enhancements to the asset.

Improvement costs will be considered only if they are incurred after 1st April 1981.

,Indexation: It is derived with the help of Cost Inflation Index.

Cost Inflation Index is simply the measure of inflation and it is notified by the Central Government every year.

Indexation is a technique to adjust income/payments by means of a price Index, in order to maintain the purchasing power of the public due to inflation.

Here is the Cost Inflation Index over the years.

,Short Term Capital Gain Calculation is as follows:,Long Term Capital Gains Calculation is as follows:,Hope this helps! In case of any query, feel free to write to us!

Capital gains tax on real estate

The capital gains (CG) tax once you sell a property is a massive tax liability.

The long term CG tax on property is levied at the 20% while short term CG adds up to taxable income.

,You can reduce tax liability by adopting following ways:,Using Indexation for calculating cost.

The cost inflation index depicts the yearly increase of inflation.

It means if cost inflation index rose from 500 to 700 in three years, the real cost of property increased from 50 to 70 lakhs in the same period.

Therefore, to get real current purchase value of the property we should inflate it corresponding to the cost inflation index.

Because of the inflated cost of the property, the capital gains reduces.

It means lesser CG tax.

Hence, through the use of cost inflation index table, you can reduce the capital gains substantially,Use indexation for any repair or any improvement cost for the property.

Just like the basic cost of house indexation benfit, you can claim indexation benefit for any repair or iny other improvement cost incurred for the property.

,Buy or construct a house: Section 54 gives relief to a taxpayer who sells his residential house and used the sale proceeds to acquire another residential property.

You can also save capital gains tax if the sold property is not a residential property.

Under section 54F, the capital gains is exempted if sale proceeds of non-residential property is invested in a residential property.

,Capital gains bond: Under Sec 54 EC, is probably the most popular method to save capital gains tax.

This is a big relief to those people who already has a house and canu2019t take benefit of section 54.

Invest into these REC bonds and you wonu2019t have to pat tax on the CG.

Interest on this is 6% p.

a.

currently and the money is locked for 3 years.

Max amount that can be invested in a financial year is 50 Lacs.

,Capital Gains account scheme.

This scheme is for people who canu2019t invest in a new residential property before filing IT returns.

It gives relief for time being.

You can invest in this scheme for 3 year.

During this period you can use the capital gains for purchasing or constructing a new residential house.

Following are the features of capital gain account scheme.

There are two types of accountsu2014account A and account Bnn(a) Account A is similar to a savings account.

You can deposit or withdraw money as you wish.

The interest rate of Account A is similar to the saving account.

nn(b) Account B is similar to the fixed deposit.

You deposit money for the specified period.

The interest rate of account B is comparable to the fixed deposits.

nnIf you plan to buy a property after a year, choose account B.

But if you plan to build a house soon, and would need money periodically, choose account A.

nnMoney withdrawn has to be used within 2 months.

nnMore here: All you need to know about Capital Gain Account SchemeCapital loss set-off.

Another way, and probably the most obvious, is to save tax on CG arising from the sale of the property is set off the capital gains against any capital loss incurred earlier.

2022 capital gains tax rate

More economic growth in the future.

Our country need a stimulus to give our economy a kickstart from the covid pandemic economic recession.

Putting money in the hands of consumers was the best idea, when tens of millions lost their jobs were lost from covid.

The spending will allow businesses to survive, and that demand will increase more jobs for those businesses that were lost from covid.

long-term capital gains tax 2022

The courts in the United States have ruled that appreciation in value is not income.

For it to be taxable, there must be u201crealization,u201d which requires a change in the property (from shares of stock to cash, for example) and a second party (the buyer who gave you the cash).

Therefore, in your example, no gain is realized until you sell the shares.

You would include the gain in your 2026 income and pay tax on it at whatever the long-term capital gain tax rates are then.

What is capital gains

Capital is something that generates income for you.

It can be a building, it can be a rickshaw, it can be a truck, it can be printing press machinery.

,When you sell these capital assets, and IF you make profit (gain), then you have to pay tax.

This tax is known as capital gains tax.

,There are two types of capital gains tax.

Short-term capital gains tax, if you owned that asset for less than 36 months, before selling it.

,Long-term capital gains tax, if you owned that asset for more than 36 months before selling it.

,Shares of a company also come under Capital Gains Tax.

And there is different u2018time-frameu2019 for them.

,Short-term capital gains tax, if you owned those shares for less than 12 months, before selling it.

,Long-term capital gains tax, if you owned those shares for more than 12 months before selling it.

,Who is to pay CGT? The seller or the buyer?Suppose I own a shopping mall building worth Rs.

1 crore and,I sell it to you for Rs.

2 crores, and thus I made the profit (Gains) of Rs.

1 crore and I have to pay Rs.

10 lakh to the government as capital gains tax.

Now the convention is that I (the seller) donu2019t actually pay Rs.

10 lakh by myself,Instead of that, you just give me only Rs.

1 crore 90 lakhs.

And keep aside 10 lakh rupees.

,Then, you (the buyer) will pay the 10 lakh rupee to the Government on my behalf.

(Thus you purchased the mall for Rs.

2 crore).

,This is the concept of Tax Deduction @Source (TDS)