What is Capital Gains Tax?

Long Term Capital Assets

Stocks can be considered as Long-term Capital assets when held for more than 12 months by the assessee. If it is helf for 12 months or less than that, then it will be considered as short-term assets. All short-term capital gains are taxable like other income. It means, that they will be added together with the income from other sources to attain a gross taxable income. In India Long-term Capital gains tax has been removed, the short-term capital gains is 10 percent.

Tax on Dividends

Dividend income is now completely Tax Free for the investor. This was abolished in 2003 budget.

Wealth Tax

Stocks, Bank deposits and other specific financial assets are fully exempted from Wealth Tax.

Tax on Bonus Shares & Rights Issue

The Bonus shares are not subject to Tax, when issued. Rights issue Shares and Bonus shares are taxable, if profit is made from them (by selling these shares).