Capital gains can arise from the transfer of capital assets. Under the Income Tax Act, certain capital gains are fully or partially exempt from taxation if the sale proceeds are invested in specified assets within a prescribed time period. Some of the key exemptions include investments made within 2 years under Section 54 in a new residential house, Section 54B for agricultural land, Section 54D/F for shifting/reestablishing an industrial undertaking, and Section 54EC for specified bonds. Failure to invest in the new asset within the specified time period results in the earlier exempted capital gains becoming taxable in the year of transfer of the new asset.

1. Capital gains By Augustin Amaladas.Lourduswamy M.Com.,AICWA.,B.Ed.,PGDFM

7. Computation of Short-term capital gain 1. Find out the full value of consideration 2. Deduct the following: a. Expenditure incurred wholly and exclusively in connection with such transfer. b. Cost of acquisition. c. Cost of improvement 3. From the resulting sum deduct the exemption provided by section 54B, 54D and 54G. 4. The balancing amount is the short-term capital gain. Short term capital gain