Capital Gains Tax
Capital Gains Tax is the tax paid on profit earned from selling an asset.
Capital Gains Tax is charged when you sell an asset like shares, property, or bonds at a price higher than what you paid for it. The tax is calculated on the profit (gain) you make.
There are two types of capital gains:
Short-Term Capital Gain (STCG): When the asset is sold within a short period, usually taxed at a higher rate
Long-Term Capital Gain (LTCG): When the asset is held for a longer period, usually taxed at a lower rate
The tax rate depends on the type of asset and how long it was held.
Example:
If you buy shares for ₹50,000 and sell them later for ₹70,000, your profit is ₹20,000. This profit is called capital gain, and tax will be charged on it based on the holding period.