{"id":7834,"date":"2025-07-15T09:26:53","date_gmt":"2025-07-15T09:26:53","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/?post_type=glossary&#038;p=7834"},"modified":"2025-07-15T09:26:54","modified_gmt":"2025-07-15T09:26:54","slug":"capital-gain-2","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/capital-gain-2\/","title":{"rendered":"Capital Gain"},"content":{"rendered":"<p><strong><a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/capital-gain\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Capital Gain<\/a><\/strong> is the <strong>profit you earn when you sell something valuable<\/strong>&mdash;like land, a house, gold, or <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/shares\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>shares<\/a>&mdash;<strong>for more than what you paid<\/strong>.<\/p>\n\n\n\n<p>Think of it like this:<br>You bought a plot for &#x20B9;10 lakh and sold it for &#x20B9;18 lakh. The &#x20B9;8 lakh is your <strong>capital gain<\/strong>.<\/p>\n\n\n\n<h2 id=\"types-of-capital-gains\" class=\"wp-block-heading\">Types of Capital Gains<\/h2>\n\n\n\n<p>Capital gains are mainly of <strong>two types<\/strong>, depending on how long you held the asset:<\/p>\n\n\n\n<h3 id=\"short-term-capital-gain-stcg\" class=\"wp-block-heading\"><strong>Short-Term Capital Gain (STCG)<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Happens when you <strong>sell an asset quickly<\/strong>, within a short period<\/li>\n\n\n\n<li>Holding period:\n<ul class=\"wp-block-list\">\n<li>Shares\/<a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/mutual-fund\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">mutual fund<\/a>s: <strong>less than 12 months<\/strong><\/li>\n\n\n\n<li>Property: <strong>less than 24 months<\/strong><\/li>\n\n\n\n<li>Gold\/other <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/assets\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>assets<\/a>: <strong>less than 36 months<\/strong><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<p><strong><a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/tax\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>Tax<\/a> Rate<\/strong>:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>15%<\/strong> on listed shares and <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/equity\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>equity<\/a> mutual funds<\/li>\n\n\n\n<li><strong>Taxed as per income slab<\/strong> for other assets<\/li>\n<\/ul>\n\n\n\n<h3 id=\"long-term-capital-gain-ltcg\" class=\"wp-block-heading\"><strong>Long-Term Capital Gain (LTCG)<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Happens when you hold an asset <strong>for a longer period<\/strong><\/li>\n\n\n\n<li>Holding period:\n<ul class=\"wp-block-list\">\n<li>Shares\/mutual funds: <strong>12 months or more<\/strong><\/li>\n\n\n\n<li>Property: <strong>24 months or more<\/strong><\/li>\n\n\n\n<li>Gold\/other assets: <strong>36 months or more<\/strong><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<p><strong>Tax Rate<\/strong>:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>10% on LTCG over &#x20B9;1 lakh<\/strong> (shares\/equity mutual funds)<\/li>\n\n\n\n<li><strong>20% with <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/indexation\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">indexation<\/a><\/strong> (property, gold, etc.)<\/li>\n<\/ul>\n\n\n\n<h2 id=\"how-to-calculate-capital-gain\" class=\"wp-block-heading\">How to Calculate Capital Gain?<\/h2>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p><strong>Capital Gain = Sale Price &#x2013; Purchase Price &#x2013; <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/expense\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Expenses<\/a><\/strong><\/p>\n<\/blockquote>\n\n\n\n<p>For <strong>LTCG<\/strong>, <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/index\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>index<\/a>ation benefit is available (adjusting cost with <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/inflation\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">inflation<\/a>).<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\">\n\n\n\n<h3 id=\"example-1-short-term-gain-on-shares\" class=\"wp-block-heading\">Example 1 &#x2013; Short-Term Gain on Shares:<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Bought 100 shares at &#x20B9;100 each = &#x20B9;10,000<\/li>\n\n\n\n<li>Sold at &#x20B9;130 = &#x20B9;13,000<\/li>\n\n\n\n<li>STCG = &#x20B9;3,000 &#x2192; taxed at <strong>15% = &#x20B9;450<\/strong><\/li>\n<\/ul>\n\n\n\n<h3 id=\"example-2-long-term-gain-on-property-with-indexation\" class=\"wp-block-heading\">Example 2 &#x2013; Long-Term Gain on Property (with Indexation):<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Bought flat in 2015 for &#x20B9;40 lakh<\/li>\n\n\n\n<li>Indexed cost (adjusted for inflation): &#x20B9;60 lakh<\/li>\n\n\n\n<li>Sold in 2024 for &#x20B9;85 lakh<\/li>\n\n\n\n<li>LTCG = &#x20B9;85 lakh &#x2013; &#x20B9;60 lakh = &#x20B9;25 lakh<\/li>\n\n\n\n<li>Tax = <strong>20% of &#x20B9;25 lakh = &#x20B9;5 lakh<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 id=\"exemptions-under-capital-gains-tax\" class=\"wp-block-heading\">Exemptions Under <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/capital-gains-tax\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Capital Gains Tax<\/a><\/h2>\n\n\n\n<p>You can <strong>reduce or avoid capital gains tax<\/strong> using certain exemptions:<\/p>\n\n\n\n<h3 id=\"section-54-sale-of-residential-house\" class=\"wp-block-heading\"><strong>Section 54<\/strong> &#x2013; Sale of Residential House<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Applies to <strong>individuals and HUFs<\/strong><\/li>\n\n\n\n<li>If you <strong>sell a house and buy another<\/strong> residential property within 1 year before or 2 years after the sale<\/li>\n\n\n\n<li>Or <strong>construct a house<\/strong> within 3 years<\/li>\n<\/ul>\n\n\n\n<h3 id=\"section-54f-sale-of-any-asset-other-than-house\" class=\"wp-block-heading\"><strong>Section 54F<\/strong> &#x2013; Sale of Any Asset (Other than House)<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Applies if you <strong>sell land, gold, etc.<\/strong> and use the money to <strong>buy a house<\/strong><\/li>\n\n\n\n<li>Full exemption if <strong>entire sale amount<\/strong> is invested in buying one house<\/li>\n<\/ul>\n\n\n\n<h3 id=\"section-54ec-invest-in-bonds\" class=\"wp-block-heading\"><strong>Section 54EC<\/strong> &ndash; Invest in <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/bonds\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>Bonds<\/a><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Invest capital gains (up to &#x20B9;50 lakh) in <strong>NHAI\/REC <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/capital-gain-bonds\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">capital gain bonds<\/a><\/strong> within 6 months<\/li>\n\n\n\n<li>Lock-in: <strong>5 years<\/strong><\/li>\n\n\n\n<li>Exemption up to &#x20B9;50 lakh per financial year<\/li>\n<\/ul>\n\n\n\n<h2 id=\"real-life-example\" class=\"wp-block-heading\">Real-Life Example:<\/h2>\n\n\n\n<p>Rina sold her old house and made &#x20B9;20 lakh profit. She used &#x20B9;18 lakh to buy another flat within 1 year.<br>Under <strong>Section 54<\/strong>, she gets full tax exemption on her capital gain.<\/p>\n\n\n\n<h3 id=\"important-notes\" class=\"wp-block-heading\">Important Notes<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Report capital gains in your <strong><a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/income-tax\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Income Tax<\/a> Return (ITR)<\/strong><\/li>\n\n\n\n<li>Keep records: <strong>purchase\/sale deeds, receipts, and cost of improvement<\/strong><\/li>\n\n\n\n<li>LTCG over &#x20B9;1 lakh on shares is <strong>taxable since FY 2018-19<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 id=\"conclusion\" class=\"wp-block-heading\">Conclusion<\/h2>\n\n\n\n<p>Capital gains arise when you sell assets for a profit. Depending on how long you held the asset, the tax rate varies. But with smart planning and using <strong>sections like 54, 54F, or 54EC<\/strong>, you can <strong>save or defer capital gains tax<\/strong> legally.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Capital Gain is the profit you earn when you sell something valuable&#x2014;like land, a house, gold, or shares&#x2014;for more than what you paid. Think of it like this:You bought a plot for &#x20B9;10 lakh and sold it for &#x20B9;18 lakh. The &#x20B9;8 lakh is your capital gain. Types of Capital Gains Capital gains are mainly [&#x2026;]<\/p>\n","protected":false},"author":9,"featured_media":0,"menu_order":0,"template":"","meta":{"footnotes":""},"class_list":["post-7834","glossary","type-glossary","status-publish","hentry"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7834","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/glossary"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/9"}],"version-history":[{"count":1,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7834\/revisions"}],"predecessor-version":[{"id":7835,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7834\/revisions\/7835"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=7834"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}