Capital gains
According to the 1961 Income Tax Act, capital gains are derived according to the transfer of capital assets. Capital gain is the profit or gain of an assessee that comes from the transfer of a capital asset effected during the previous or assessment year.
Capital assets
Under section 2(14) of the 1961 Income Tax Act, a Capital Asset is defined as property of any kind held by an assessee, including property held for their business or profession. A capital asset includes all property types as well as all rights in property. It is also defined as gains on a transfer of assets where there in no cost of acquisition such as:
According to the 1961 Income Tax Act, some assets are not included as Capital Assets, including:
NOTE: Jewelry that is also a movable asset falls under heads of capital assets.
NOTE: Agricultural land that falls under municipal limits (in an area where the population exceeds 10,000) falls under Capital Assets. Agricultural land within 8 km of municipal limit also falls under Capital Assets if notified by the central government of India.
Transferring capital assets
Under Section 2(47) of the 1961 Income Tax Act, transfer of capital assets is defined as:
NOTE: This may also be a term of transfer.