Whether intentional or unintentional, non-disclosure of incomes is a sin as per income tax act. We have been discussing various incomes that need to be declared while filing tax returns. This article is part of that series where we will be discussing various capital gains that need to be declared in the ITR form.
(Also see: 8 important tax changes in 2014)
Capital gain is basically the profit generated by selling an asset. The asset can be stocks, equity mutual funds, gold or real estate. It is not exempt for tax filing. In many cases, there can also be loss by selling an asset. This is known as capital loss. Capital loss can be used to offset the capital gains in order to reduce the overall tax. Here are the short term capital gains (STCG) and long term capital gains (LTCG) of various products that we must declare while filing income tax returns:
Shares/Equity Mutual Funds
Profit from equity products such as stocks and mutual funds is considered as STCG if the holding period for such products is up to 1 year.
If stocks or mutual funds are held for more than 1 year, then it would be treated as LTCG. In such cases, tax on them would be nil. However, you need to declare the profit obtained in the tax returns.
(Also see: Six lesser known deductions during tax filing)
If investment in gold is up to 3 years, it is treated as STCG for the purpose of tax. This is only in the case of physical gold. If gold is held in the form of ETF of gold fund, the tenure would be 1 year.
Gold investment in treated as LTCG if holding period of the investment is more than 3 years. In such cases, indexation benefit is also given while calculating tax.
Any investment in real estate such as house property, flat, plot, etc is treated as STCG if it is held up to 3 years. Profits are added to the total income for calculation of tax.
Investments in real estate such as the ones mentioned above are treated as LTCG if investment is for more than 3 years duration. Indexation benefit is provided in such cases. This can reduce the overall tax burden.
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