As per Sec 45(1), profit and gains on the transfer of any capital asset shall be considered to be capital gains.
As per section 2(14) capital asset means property of any kind, whether fixed or circulating, movable or immovable, tangible or intangible.
Capital asset doesn’t include
- Stock in trade, consumable stores, raw materials held by the assessee for the purpose of his business or profession
- Any movable property (for example,wearing apparel, furniture) held for personal use by the assessee or any family member of the assessee.
Following movable asset shall be considered to be capital asset
- Archeological collection
- Any art work
If any person has transferred short term capital asset, then capital gain is short termand if asset transferred i.e. long term, capital gain shall be long term
Any asset will be considered as a short term capital asset if it is transferred within a period of 3 years from the date of purchase.
Any asset transferred within a period exceeding 3 years from the date of purchase, it will be considered as long term capital asset.
However, if following asset is transferred within a period of 1 year, then it will be considered as short term otherwise it will be considered as long term capital asset.
- Equity or preference share of a company listed in Stock Exchange.
- Securities (like debentures, bonds, government securities) recognized in stock exchange of India.
- Units of UTI
- Units of Equity oriented funds(units of Mutual funds, where 65% of the total amount is invested in equity shares of industries/companies