According to sec 2(14) Capital Assets mean:

  • Property of any kind held by an assesse, whether or not it is connected with his business or profession
  • Securities held by Foreign Institutional Investors which has invested in such securities in accordance with the SEBI regulations.

It does not include:

  • Stock in Trade, Consumable Stores, Raw materials held for the purpose of business or profession.

Note: Even if the nature of security in the hand of Foreign Portfolio Investor is stock in trade, same would be treated as a capital assets and profit on transfer of such security is taxable as capital gain.

  • Personal Effects:

Movable property held for personal use by the assess or any of his family member’s dependent on him

Following are excluded from Personal Effects and are chargeable to tax when transferred as capital gain.

1: Jewellery

2: Panting & Sculptures

3: Archeological Collections

4: Drawing

5: Any work of Art

  • Rural Agricultural Land
  • 6 ½ Gold Bonds 1977
  • 7% Gold Bonds 1980
  • National Defense Gold Bond 1980
  • Special Bearer Bond -1991 (issued by Govt of India)
  • Gold Deposit Bond issued under Gold Deposit Scheme 1999
  • Deposit Certificate issued under Gold Monetisation Scheme 2015 notified by the Central Govt.

Definition of Jewellery:

Jewellery includes:

  • Ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metal, whether or not containing any precious or semi-precious stones, and whether or not worked or sewn into any wearing apparels.
  • Precious of semi-precious stone, whether or not set in any furniture, utensils or other articles or worked or sewn in any wearing apparel.

Note: Property Includes or deemed to have always includes any rights in or in relation to an Indian Company, including rights of management or control or any other rights whatsoever.

Short Term Capital Assets & Long Term Capital Assets

Definition: As per Sec 2(42A) short term capital gain assets means a capital asset held by an assesse for a period not more than 36 months immediate preceding the date of its transfer.

As per Sec 2(29A), Long term capital assets means a capital asset which is not a short term capital asset

Following assets are treated as Long Term Capital Assets even though held less than 36 months:

  • Security (other than units) listed on recognized stock exchange
  • Units of Equity Oriented mutual funds
  • Units of UTI
  • Zero Coupon Bonds

Will be considered as long term capital assets if held for more than 12 months immediately preceding date of its transfer.

Exception:  Shares of company not been listed on recognized stock exchange in India or immovable property located in India including land & building or both shall be treated as long term capital assets if held by an assesse for more than 24 months immediately preceding the date of its transfer.

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