Capital Gains: Incomes Which Are Exempt From Tax Under Section 10

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Any profit or gain arising from the sale of capital asset in the particular year is subject to tax under the head of capital gains.

If you sell the property at a profit in less than three years, then short term capital gains tax shall be applicable.

On the other hand if you sell the property after three years, then a capital gains tax of 20 per cent shall apply after indexation.

Capital Gains: Incomes Which Are Exempt From Tax Under Section 10

Section 10 provides list of incomes which are exempt from tax. Amongst these the major exemptions relating to capital gains are listed below:

Section 10(33):

Long-term or short-term capital gain arising on transfer of units of Unit Scheme, 1964 (US 64) which is transfered on or after 1-4-2002. Means any gain arising from the redemption of units is exempt under Income Tax Act.

Section 10(37):

An individual can claim exemption in respect of capital gain arising on transfer of agricultural land situated in an urban area by way of compulsory acquisition.

This exemption is available if the land was used by the taxpayer for agricultural purpose for a period of 2 years immediately preceding the date of its transfer.

Section 10(38):

Long-term capital gain arising on transfer of equity shares or units of equity oriented mutual fund (*) or a unit of a business trust other than a unit allotted by the trust in exchange of shares of a special purpose vehicle as referred to in section 47(xvii), will be exempt from tax, if the following conditions are satisfied:

  • The asset transferred should be equity shares of a company or units of an equity oriented mutual fund or a unit of a business trust other than a unit allotted by the trust in exchange of shares of a special purpose vehicle as referred to in section 47(xvii).
  • The transaction should be liable to securities transaction tax at the time of transfer.
  • Such asset should be a long-term capital asset.
  • Transfer should take place on or after October 1, 2004.
  • Equity oriented mutual fund means a mutual fund specified under section 10(23D) and 65% of its investible funds, out of total proceeds of such fund are invested in equity shares of domestic companies​

Source: Income Tax
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