Profits accrued through the sale of assets such as mutual fund units, bonds, patents or trademarks are capital gains. Depending on whether the price of such assets increase or decrease, they can accumulate capital gains or losses. A capital gains calculator can help you estimate these gains/losses for the financial year.
Now, let us learn how to use this utility tool.
This is a simple, free and easy-to-use online tool that shows you the STCG (short-term capital gains) or LTCG (long-term capital gains) depending on the holding period of your investment. With it, you can also calculate your tax liability on capital gains earned from mutual funds and equity shares.
The capital gains tax calculator consists of a formula box, where you have to enter the following information to calculate the taxable capital gains:
The calculator will show the capital gains/losses, total payable tax and holding period in months.
Also read: How to use Online Income Tax Calculator?
Follow the given simple steps to calculate your capital gains/losses and applicable tax.
Select the asset type (shares, units of equity mutual funds, debt funds or gold ETFs, etc.).
Enter the date on which you bought the assets.
Enter the date when you sold these assets.
Fill in the net purchase price and selling price of the units sold. Remember to deduct any additional charges required to buy/sell the units.
Click on the ‘Calculate’ button to know the results.
Capital gains are profits gained when a taxpayer transfers or sells a capital asset. Such an asset may be movable, immovable, tangible or intangible. Examples of capital assets include bonds, debentures, shares, land, house property, mutual funds, patents and trademarks.
There are two main types of capital assets:
STCA refers to an asset with a holding period of 36 months or less. For immovable properties such as plots of land, houses or buildings, the holding period is 24 months, while for listed securities, it is 12 months.
When you hold assets for over 36 months, they are referred to as long-term capital assets (LTCA). For unlisted shares and immovable property, LTCA is applicable for a holding period above 24 months. However, for listed securities, the holding period is above 12 months.
When the underlying value of capital assets increases, you can sell them at a value higher than the purchase price for capital gains. When the value of assets decreases from its purchase price, selling them would result in a capital loss.
The following formula is used to calculate STCG:
STCG = Full Value Consideration – (Acquisition Cost + Cost of Improvement + Cost of Transfer)
You can use the following formula to calculate LTCG:
LTCG = Full Value Consideration – (Indexed Acquisition Cost – Indexed Improvement Cost + Cost of Transfer)
Hence, Indexed Cost of Acquisition = (Total cost of acquisition x CII of the year of transfer)/CII of the year of acquisition.
Taxation on capital gains depends on the holding period of assets. For assets such as shares, commodities, bonds or real estate, long-term capital gains taxes are applicable for longer holding periods (12, 24 and 36 months). STCG is applicable when the holding period is less than these limits, depending on the type of assets.
The following are taxation rates of capital gains earned from shares and mutual funds.
|LTCG on equity shares or units of equity funds
|LTCG on other assets
|STCG with securities transaction tax (STT)
|STCG without securities transaction tax
|10% over capital gains of Rs. 1 lakh (without indexation)
|20% with the benefit of indexation
|STCG added to one’s income tax return and taxed as per applicable income tax slab
Also read: Take-Home Salary Calculator
You can use the capital gains calculator to estimate capital gains from investments based on the holding period and other factors. It also helps you calculate taxation on capital gains, so you can use this tool to plan profitable investments and save taxes.
Ans: Indexation refers to adjusting the purchase price of an asset to offset the effects of inflation. This benefit allows you to increase the purchase price of the investment, which would lower your net profits and taxable income.
Ans: Incomes earned from the sale of the following assets are not treated as capital gains for taxation purposes:
Stocks and consumables used for business
Gold deposit bonds
Special bearer bonds
Gold Bonds (6½%, 7% and National Defence)
Properties used for personal use (clothes, furniture)
Ans: Yes, Indian citizens above 60 years and below 80 years old can get tax exemption if their total taxable income is below Rs. 3,00,000. Super senior citizens (above 80 years of age) can get tax exemption if their total taxable income stays below Rs. 5,00,000.
Ans: Yes, but a capital loss can be offset against a similar capital gain and not for a different source of income. Therefore, long-term capital losses can be offset against only long-term capital gains. You can also carry forward capital losses for up to 8 assessment years since incurring losses.
Ans: This is a fixed value that the Government of India (GOI) declares every financial year to depict the overall rate of inflation. This value helps to calculate the indexation benefit on long-term capital gains. For FY 2021-22, CBDT (Central Board of Direct Taxes) has set the CII at 317.
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