How to get exemption from paying Capital Gain Tax

How to get exemption from paying Capital Gain Tax

However, our MPs are human beings, and they understand the general reluctance of people to pay taxes. That may be one of the reasons that while drafting their tax laws also provides an opportunity to pay lower taxes with provisions for exemption.
The Income Tax Act of 1961, which includes Capital Gain Tax is also no exception to that rule.


What is a capital gain tax?

Wikipedia has set the capital gain tax (CGT) “is a tax on capital gains, the gain is realized on the sale of non-inventory assets purchased at a lower cost than the amount realized in sales.The most common capital gains are realized from the sale of shares, bonds , precious metals and property “.

The Income Tax Act of 1961 states that the tax incidence of Capital Gain depends on the length at which the transferred capital asset is carried out prior to the transfer.

Short Term Capital Profit Vs Long Term Capital Benefit

Usually, capital assets held for 36 months or less are called ‘short-term capital assets’ and capital assets held for more than 36 months are called ‘long-term capital assets’. How to get exemption from paying Capital Gain Tax

However, the Company’s shares, units of the Trust of India Units or certain Investment Funds or securities listed on the Acknowledged Stock Exchange should be considered short-term capital assets if held for twelve months or less and long-term capital assets if they last more than twelve months . Tax exemptions are only available in long-term capital gains.

How can we use this liberation?

Section 54 of Law T, 1961, describes the submission of exceptions:

Section 54: Capital Gain TaxExemptions when selling residential houses and then purchase another residence.

• A person or HUF sells residential property, • long-term capital assets, which are owned for more than 3 years, • and capital gains (the difference between the purchase price and asset sales) are invested to buy another. residential property? either within a year before the sale or? within two years after the sale or? build residential property in three years of sales,

• and holding a residential property for three years, are entitled to exemption under this Income Tax section. Section 54 B: Taking Taxes Capital Profits when selling agricultural land and then purchasing another farm • Someone sells agricultural land • which is owned and used by him or her parents • at least two years, • and capital profits are invested to buy other farmland • within two years, • is entitled to exemption under this Income Tax section. How to get exemption from paying Capital Gain Tax

Sec 54EC: Capital gains investment in long-term Capital Gain Gain

This section provides that capital gains arising from the sale of long-term capital assets are not taxable if such profits are invested in ‘defined long-term assets’ within a period of six months after the date of the transfer. .