Real estate, gold, bullion, bonds and shares are few examples of capital assets. Any gains that you make from the transfer of these capital assets are known as capital gains and attract income tax.
The tax liability depends on the assets and the period for which that asset was held by the seller.
For instance, in case of real estate, if it was held for less than two years, then gains (sale minus purchase price) from the transfer will be considered short-term capital gains (STCG). It gets added to the seller’s other incomes and is taxed at the applicable slab rate.
If the property was held for more than two years, then the gains are considered long-term capital gains (LTCG) and taxed at 20% with indexation.
Similarly, in case of equity shares, if shares are held for less than a year, gains would be considered as STCGs and in case they were held for more than one year, gains are considered as LTCG.
STCGs on shares where security transaction tax (STT) is paid are taxed at the rate of 15% plus cess.
On the other hand, LTCGs of up to ₹1 lakh in a year from shares or equity investments is exempt from income tax, whereas any gains above ₹1 lakh in a year is taxed at the rate of 10%.