Section 48: Method of computation of capital gain

By | April 13, 2016

Computation of capital gain depends upon the nature of capital assets transferred, viz., short-term capital asset or long-term capital asset. The tax incidence is generally higher in the case of short-term capital gain as compared to long-term capital gain.

S. 48 determines the method of computing Capital gains. Capital gain can be computed by deducting from the value of consideration received or accruing as a result of transfer of the capital asset the following amounts:

1.  Expenditure incurred wholly and exclusively in connection with such transfer.

2.  The Cost of acquisition of the asset and cost of improvement thereto.

The method of computation of short-term and long-term capital gain is as follows:

Long-Term Capital Gain Computation:

ParticularsAmount (In Rs.)
Sale Consideration

Less:

         Indexed Cost of Acquisition 

        Indexed Cost of Improvement  

        Cost of Transfer  

……

 

……

……

……

Short-Term Capital Gain Computation:

ParticularsAmount (In Rs.)
Sale Consideration

Less:

        Cost of Acquisition 

        Cost of Improvement  

        Cost of Transfer  

……

 

……

……

……

From the resulting sum deduct the exemption provided by  S. 54, 54B, 54D, 54EC, 54G, 54GA.

The balancing amount is short-term capital gain or long-term capital gain.

Note:

No deduction will be allowed in respect of payments of Securities Transaction Tax (STT) in computing income under the head “Capital Gain”.

Reference:

As per Section 48, Income-tax Act, 1961-2014-

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