What is Capital Gain? Section 45(1)
People these days are more involved in sale & purchase of properties. The profit or gain arising from sale of these capital assets such as house property, land, buildings shares, bonds, jewelry during a financial year will be charged under the head “income from capital gains”.
For e.g., Many people do share trading. First the share is bought and received after delivery date and then sold. The profit they earn by such activity will be termed as capital gain.
Further it can be explained by taking one more example:
Mr. Arjun bought a house in 2015 for Rs. 1 crore and sold the same after 5 years for Rs. 2 crores. So here arises capital gain. This income earned by Mr. Arjun will be taxed under the head “capital gains”.
The following are the essential conditions for taxing capital gains with reference to Section 45(1):
- There must be a capital asset;
- The capital asset must have been transferred/sold out;
- There must be profit or gains on such transfer, which will be known as capital gain;
- Such capital gain should not be exempt u/s Section 54, Section 54B, Section 54D, Section 54EC, Section 54F, Section 54G, Section 54GA or Section 54 GB.
Disclaimer: The above-mentioned cases are illustrative and not exhaustive. This article is only for discussing general issues and hereby we do not express any opinion or give any consultation in what so ever manner understood. The cases may differ from assessee to assessee. We recommend you to take expert advice depending upon your particular case.