Capital gains tax is a tax that is charged on the profits that one has made by selling his capital asset. For making it easy for taxation, the capital assets are classified to ‘Short-Term Capital Asset; and ‘Long-Term Capital Asset’.
· Short-Term Capital Asset:
If the shares and securities are held by the taxpayer for a period less than 36 months preceding the date of its transfer will be treated as a short-term capital asset.
· Long- Term Capital Asset:
If the taxpayer holds the shares and securities for a period exceeding 36 months before the transfer will be treated as a long-term capital asset.
Equity shares which are listed in a recognised stock exchange, units of equity oriented mutual funds, listed debentures and Government securities, units of UTI and Zero-Coupon Bonds’ period of holding will be considered for 12 months instead of 36 months.