SHORT ANSWER:
Capital gains tax is a tax on the profit made from the sale of assets.
DETAILS:
- It applies to the sale of capital assets like property, stocks, and bonds.
- The tax rate depends on the holding period of the asset: short-term (less than 36 months for most assets) and long-term (more than 36 months).
- Short-term capital gains are taxed at the individual's income tax slab rate, while long-term capital gains above ₹1 lakh are taxed at 20% with indexation benefits.
PUNISHMENT / IMPLICATIONS (if applicable):
- Failure to pay capital gains tax can lead to penalties and interest on the unpaid amount.
SOURCE:
- Income Tax Act, 1961
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