Short tem Lery etc.

han 36
capital gain or loss Is
omputed im he
Sales consideration lOlowing manner.
nner-
Less
Aggregate amount of the following:
(a) Transfer Expenses
(advertisement,
brokerage, legal expenses etc.)
(6) Cost of acquisition of the asset
(c) Cost of improvement
Short term capital
gain / loss
Note : If the
aggregate amount of cost of
transfer expenses is acquisition improvement
higher
term capital loss. Short
than sales
consideration, the result will
cost and
and
term loss can be be sh
capital gain or long term adjusted against any short tem
income. capital gain but it can not be
set off
against othe
EXAMPLE : SHORT TERM CAPITAL
GAINS
SPP-1
An assessee
2020 and purchased an old house for
registration charges were paid 60,000.3,60,000 on January 1,
T 80,000 for its
improvement. On August 1, 2021 theBesides, he incurred
7,50,000. Brokerage paid 7 30,000 and house was sold for
Compute capital gains. other expenses were 20,000.
Solution:
In above situation
because the immovable
profit eamed by him will be treated as short
tem
property was held by the assessee not more than 24capital gain,
Sales consideration
monthis
Less -Aggregate amount of the following items 7,50,00
(a) Sales and transfer
expenses
() Brokerage
i) Other expenses 30,000
(b) Cost of acquisition and 20,000 50,000
() Purchase price improvement
(Gi) Registration expenses 3,60,000
ii) Improvement expenses 60,000
80,000 5,00,000(-)5.50.00
2,00,000
Short term capital gain|
 CUU5-0D6
117 2006-07 2007-08 113
2009-10
122 129 2008-09
137
148 2010-11 2011-12
2013-14
167 184 2012-13
200
220 2014-15 2015-16
2017-18
240
2018-19
254 2016-17
264
272 2019-20
280 289 2020-21
Index for the 301
year of transfer 2021-22 317
ASSETS ACQUIRED
BEFORE 1.4.2001 BY THE
If the
transferred ASSESSEE-
asset is held by the
acquisition will be taken- assessee prior to
1.4.2001, thee t
(a) Original cost of o

or
acquistion
(6) Fair market value
of the asset
which ever is opted on 1.4.2001,
by
the assessee.
Normally assessee Opts higher value from aforesaid
minimise tax liability. options t
Note Improvement expenses incured before 1.4.2001
not be added to
original cost.
should be [Link]
Formula :
Original cost or fair
Market Value on 1.4.2001x Index for the yearin
Indexed Cost which the asset is
of Acquisition = (generally whichever is more) transferred, ie.20212317
Cost Inflation Index for
2001-02, i.e.100
SPP-2
An assessee purchased a house on 1st January, 1995 for 1,40,0
and sold it on lst January, 2022 for F 5,80,000. Ón Íst April, 2001 fair m
value of the property was 1,50,000. Cost Inflation Index for theyear 202123
year 2021-22.3
Determine the cost of acquisition and compute Long Tem Capital Galn
Golution
uion nroperty is head by assessee before 1.4.2001 then cost of acquisition will
f th
f o l l o w s

as

y
takenOriginal cost (1995) 1,40,000
or 1,50,000
airmarket
value (1.4.2001) 1,50,000
Whichever is more

150,000 will be taken as cost of acquisition for indexation.

Calculation of Long term Capital Gain

consideration of the asset 5,80,000

Transfer
Index cost of acquisition
Less
Cost of acquistion (1.4.2001) x Index of the transfer year
Index for 2001-02
2021 22)
1.50,000x 317 (year -)4,75,500
100(2001- 02)
Long term capital gain 1,04,5000

ASSESSEE ON OR AFTER 1.4.2001

n FOR ASSETS ACQUIRED BY THE
asset is acquired by the assessee after 31.3.2001,
then actual
If the transferred It will be
will be taken for tinding the index cost of acquisition.
nst of acquisition
Calculated in the following
manner -

Cost of Acquisition x Index for the year

Indexed Cost in which the asset is transferred (2021-22)

of Acquisition =
Cost Inflation Index for the base year
the assessee
in which the asset is acquired by

SPP-3
1st April, 2 D06 1,80,000
Anassessee purchased a building for on

Indexes for 2006-0 and

andsold it for 75 lac on 1.8.2021. Cost inflation
2021-22 are 122 and 317 respectively. Compute Long term Capital gain.

Solution
Computation of Long term capital gain

Transfer consideration 5,00,000

Less- Indexed cost
Indexed cost of acuisition-
Actual Cost acquistionx Index for 2021-22
Index for 2006-07
(year in which property acquired
1,80,000 x317
122 4,67,705
Long term capital gain 32,295
SPP.4
house in 1st January 2020 at
the cost of
constructed a
An assessee
the house
In 2020 he spent 30,000 for its improvement. He sold
1.50,000. and other expenses bomne
on 1st October2021 for 3 lac. Brokerage paid 20,000
10,000 in respect of sale. Compute capital gain.
Solution
Computation of taxable capital gains
Sales Consideration (Short temm) 3,00.000
Less- Aggregate of following:
(a) Transfer expenses (Brokerage) 30,000
(b) Actual cost of acquistion 1,50,000
c) Improvement cost 30,000 (-) 2,10,000
Short term capital gains| 90,000

SPP-5
An assessee purchased an old house for ? 2,60,000 on 1st August,
006and spent 30,000 for its improvement is January 2008. The house
S sold by him on 1st September 2021 for R 7,80,000. Brokerage was paid
10,000 for
0,000 for the transaction. Compute taxable capital gains.
370/Income Tax
Cost inflation index were as under -
2006-07 122
2008-09 129
2021-22 317
Solution
Computation of long term capital gains
Sales consideration
Less- Aggregate amount of the following : 780.00
(a) Transfer expenses (brokerage)
(b) Indexed cost of acquisition
10,000
Purchase Price x Index for 2021- 22
Index for 2006- U7 (year of
purchase)
2,60,000x31 =6.75,574
TZZ
(c) Indexed cost of improvemeni 6,75.574
Purchase Price x Index for 2021- 22
index for 2007 - O08 (improvement)
30,000x 317
129
=
73,721 73,721 7,59.295

Long term capital gain| 20,705

SPP-6
Mr. Vikas Tanted got a house in inheritance of his father on 1st May
2009. The house was constructed by his father in 1980 at the cost of

50,000.
In 1998 7 25,000 were spent on improvement and 20,000 were spent10
current repairs of the house at time to time. In 2009 he again spent 30,000 for
value of the property was 4 lac on 1st Apil, 2001. The
improvement. Fair market
Tanted on Ist INovember, 2021 for 14 lac 50 thousand and
house was sold by Mr.
on seling price.
brokerage paid 2 %
and compute taxable capital gains.
Detemine cost of acquisition
year 2001-2 (100), 2009-10 (148), 2021-22 (317).
Cost inflation Index
were -

Solution determined under

acquisition of the property will be
as
Cost of
50,000
construction
1980 50,000
cost of
(a) Original before
Improvement
expenses
Ni
+ 1998 25,000
would be ignored
1.4.2001
1.4.2001
50,000
before r
Cost
Original
So, 4,00.000

1.4.2001
on
value
market
Fair
(b)
 indexation point
so cost of acquisition will be R 4 lac from
ouer is higher,

Computation of taxable capital gains

s consideration
14,50,000
29,000
L Brokerage

14,21,0000
Index
cost of acquisition
1.4.2001xIndex for 2021-22
Is+
on
Cost
Index for 2001 0 2
4,00,000x
100
311 12.68,000
Cost of Improvement
30,000x317
148 +64,257 H13,32,257
(2009-10)
Long term capital gains 88,743

Notes
1 Current repairs are not noticeable.
incurred before 1.4.2001 will not be considered.
2. Improvement expenses
SPP-7
Mrs. Leela Nahar sold a residential house for
7 40,80,000 and
2021.
brokerage paid F 80,000 on 1st August
The house was purchased by her in 2000 for 10,00,000 and registration
She has a new flat for
purchased 6 lac on 1st January, 2022
charges paid 7 30,000.
40,000 Registration charges paid. Find out taxable long tem capital gains.
Solution:
Computation of long term capital gains

Sales consideration of house (Long tem) 40,80,0000

- 80,000
Less- Expenses Brokerage
Net consideration 40,00,0000

Less- Indexed cost of acquisition

Cost of acquisition x Index for 2021
-

22
Index for 2001 - 02

()32,65,100
10,30,000x 317
100
Gain 7,34,900
Long term capital
Les
EXemption u/s 54: Cost of new flat purchased
within
(-)6,40,000

oneyear before (6,00,000+40,000) 94,900

Taxable long term capital gain
 372/Income Tax

SPP-8
agricultural land on
1.1.2005
Mr. Nirmal Sakiecha purchased an

for registration. The agricultya

1,60,000 and stamp charges paid 7 10,000
of Jaora Municipality. On 1st August, 2021 the
the said
said
land is situated within local limits
was paid @1%.
On lst January 2022 ho
land w a s sold for R 12,50,000 and brokerage
purchasing year 2004-05
purchased a n e w agricultural land
for 6 lac. Index for
113 and for transfer year 317. 2022-23.
Assessment Year
for the
Compute taxable capital gains

Solution: capital gains

of long term
Computation
12.50,000
land (Long tem)
Sales consideration of Agricultural
amount of the following- 12,500
Less- Aggregate
(i) Transfer expenses
Indexed cost of acquisition
4,76,903
4.89,403
1,70,000x317
113 7,60,597
Long-term capital gain
u/s 54 (b)
Less- Exemption
agricuitural
land R 6 Lakh
Cost of n e w
M a x i m u m up
to capital gain -)6,00,000
Or
whichever is less
7 7.60,597 1,60,597
Capital Gain
Taxable Long-term

PRACTICAL
PROBLEMS (SPP)
LONG

which is long
short term capital gain and
SPP.9 which is
reasons
with allowed
tion will be allowed
-

ate much
deduction

?
How
May, 2020 for 30,000 and
capital gain purchaseda
house on lst
Sheela Mittal
term

Ms. 2021 for 36,00o.

(a) 3 i s t August,
1st Jan. 2020
an. 2020
sold o n [Link]é residential plots on
Champawat
Mr. Kapil those on 1stFebruary 2022 for R 60,000.
f sold
o r 4 0 , 0 0 0a n d s ola
40.000 and (289) and 2 0
2021-22
were re -2019-20 (289)
-
2019-20 (317).
Index
Inflation
ost
was
he asset
ta! wi
Mittal will get shorn tem capital gain, because
Solution: S h e e l a

for not more than 24 months, i.e. 16 months. So,

i
Mrs. a s s e s s e e

(a) the will be as under

held by
taxable short te
emrm capital gain
 Capital G a i n s / 3 .

consideration of the house 36,000

Sales
Less
Cost of acquisition (30.000
Short Term capital gain 6,000
earned long term capital gain from transfer of plots
Mr. Kapil Champawat
(b) than 24 months
-

held by him for

more

Sales considerations 60,000

Less Indexed cost of acquisition
40,000 x 317 (Index for 2021- 22)
289 (Index for 2019 - 20) (-)43,875

Long Term capital gain 16,125

SP 20
2,40,000 on 20th June,
office building for
.SachinTalati sold an

1,48,000. Its written

him in June 2013 for
a7! which was purchased by
1st April, 2021. He sold shares of a company for
i Value was { 90,000 on
him on 1st July
24.000 through Mumbai Stock Exchange which were purchased by
9,O00. Securities Transaction Tax paid R 24. Calculate Capital gain.
2019for
Solution:
asset is treated short term
) Capital gain arising from depreciable as

capital gain for Mr. Talati. Period of holding is not noticeable-

Sales consideration of office 2.40.000
Less WDV on 1.4.2021 (-)90,000
Short term capital gain 1,50,000
(Gi) Mr. Talati held shares for more than 12 months so it is long term asset,
these shares were sold through Stock Exchange and Securities
Transaction Tax was paid, capital gain 15,000 is not taxable.
Because it is not more than 1 Lac.
CAPITAL GAIN ON DEPRECIABLE ASSET
SPP-11
Mr. Unmesh Mandloi furnished the following particulars about his
ncome during the previous year 2021-22-
. Business income 2,98,000.
.2. Capital gain 7 7,000 from a house sold on 31st July 2021. He occupied
this house before 1 year.
O
3. n 31st May 2021 he sold equity shares of XYZ to his friend for R 30,000.
Ihese shares were him on 1st April, 2008 for 14,000.
purchased by
Sesides, equity shares of ABC Ltd. were sold on 30.11.21 for 38,600,
2009. These
for 18,700 on 1st January
[Link] purchased by him and Securities
Transaction
Shares were sold at National Stock Exchange
Tax was paid 7 48.
 374/Income Tax
4 He sold an agricultural land for 17,000 during the previous year
land was owned by him for the last 5 years, which was purchasohe
4,000. The land is situated in a village with a population of 8,000
ased i
5. On 1st March 2022 he sold a flat for 7 3,00,000 which was purcha
him on 1st Jan. 1996 for 7 40,000. Its fair market value was 500
1st April, 2001. 0 on
mpute the Taxable Capital Gains for the Assessment Year 2022-23
aCX
Numberfor-2001-02 (100), 2008-09 (137) and 2021-22 (317). Cost
Solution:
Statement of Capital Gains Assessment Year 2022-23 HOU

Short term capital

gain from building
1 Long term capital gain from shares (See note No. 1) 7,0
Less. 1. Sales consideration (XYZ Ltd.) 30,000
Less- Indexed cost of
acquisition
Purchase Cost x2021-22 Index
2008-09 Index
14,000 x 317
137 (-)32,394|
2. Shares sold of ABC Ltd. 38,600 18,700
=
19,900 (not taxable because securities
transaction tax paid and below 1 lakh)
ii) Rural Agricultural Land (Not Capital assets) Ni -)2,394 Less
(iv) Long tem capital gain from Flat-Sales
Less- Indexed cost of acquisition
consideration3,00,000
Market value on 1st Apil 2001 x 2021 22 Index
2001-02 IndexX
50,000x 317
100
1,58,500 1,41,500 T
Taxable Capital Gains 1,46,106
SPE
Notes:
1. Shares of XYZ Ltd. were sold to friend directly and Securities Transaction he
not paid, Therefore taxable as long-tem on the other hand shares of AD
beir
Ltd. were sold through Stock Exchange and Securities Transaction ad
because its
paid so long-term capital gain on these shares is not taxable
more than 1 Lakh. ollowing

assets has been found out in the tolo e

2. Index cost of long tem capital
alVer
manner-
2021-22
Cost of acquisition x Index No. for
Index No. of the base year wher

asset because it is situated at t

land is not capital
3. Agricultural
under 10,000
B7
population is is taken
prior to 1.4.2001. So value on 1.4.2001
The flat is acquired
4. because it is higher than original
coOst.
of acquisition,
 information
-

the following
furnished
residence. On 1st
onak Gupta of R 3 Lac for
self
P 1 2

at the cost
in 1998 flat o n 1st Jan.
Mr. uilt a
house

house for ?
12,50,000 and purchased a n e w
2% brokerage
4gUst
2U21, h e ho sold this or registration
? 6,000. He paid
20.000. Stamp fees paid free and taxable capital gains with
Compute his tax
hase of property.
2 for
17
sa/e

Ä i n gN o t e

solution: Assessment Year 2022-23

Capital Gains
Computation of

term
capital asset) 12,50,000
ong
HaU? ( consideration of the house )25,00o
Saies
Brokerage on Sales Net Consideration 2,25,000

Indexed cost
of acquisition
LES

Cost x 2021 -

22 Index
Original
2001 0 2 Index

3,00, 000 x 317 9,51,000

100
Long Term Capital Gain 2,74,00o

Less- Cost of (u/s 54)

new flat

Purchase price + Brokerage 2% + Registration fee

1,20,000 + 2,400 + 6,000 =
1,28,400 (-)1,28,400
Or maximum upto capital gain =
3,85,000 whichever is less
Taxable Capital Gains 1,45,600

The Cost of new flat purchased is 1,28,400 is not more than taxable capital gain,
there fore fuly deductible.
SPP-13
Mr. Rajendra Bandi sold a house for 20 Lakh on 1st December 2021.
in 1990 ai the cost of 1.5 lakh and
Ihe house by him
was constructed
being used for own residence-
2,00.000 to
Besides, he has two more houses. On 1st May 2022, he invested
construction he spent
ied Bonds of National Highway Authority of India. After on
,000 in 2006-07 on improvement of the house. He also spent 2,000 per year
verage for nomal repair and painting of the house.
the
his taxable capital gains. He paid 3% brokerage
for selling hous
Lompute market value ot the
On 1st April 2001 the fair
erexpenses were 10,000. 2021-22
2006-07 (122) and
house
317
was
5 Lakh. Cost Index are 2001-02 (100),
317)
376/IncomeTax
Solution Gains (A.Y. 2022-23)
Computation of Capital

Sales Consideration (L.T.) 200000

Less- (a) Transfer expenses (brokerage
3% and other expenses
000 + 10,000)
60,000+
70.000
Net consideration
1930.00
6) Indexed cost of acquisition
based on actual cost (see note)
Fair Value on 1.4.2001 x 2021-22 Index
2001- 02 Index

5,00, 000 x 317 15,85,000

100
(c Indexed cost of improvement
2021 22 Index
Cost of improvement x
-

2006 07 Index

14, 000x 317 36,377 16.2137

122
Long term capital gain 3,08,620
Less- Exemption u/s 54 EC
Investment in notified bonds of NHA of
India 2,00,0
Taxable long term capital gain 1,08,623

Notes
house is acquired before 1.4.2001, so actual cost 1,50,000 or fair value
(1) The
on 1.4.2001, 1,20,000 whichever is higher, will be taken as cost of acquisition,
i.e. 5,00,000
assessee has deposited R 2 lac in Notified Bonds
issued by National
(2) The
Highway Authority of India within 6 months, so capital gain will be exem

upto 2 Lac u/s 54EC.

SPP-14
Mr. P.K. Jain has sold the following assets during the previous yeu
2021-22
1. A residentie.. house was sold on 1st September 2021 for 10,00.0peni
The house was purchased on 1st January 1990 for 7 1,70,000 andon
s Ist
718,000 for improvement in 1996. Its market value was 2,80,000 2003
April 2001. 1,40,000 was spent for its improvement in da forsale
spent
Brokerage 20,000; advertisement expenses 8,000 were spen
He has no other hous_e property. cosins

2. He is the owner of an industry. On 1st April 2008 machineh 3 lakh

7 lakh was installed. Written down value for themachines 0.00.A
O 3,60,0
1-4-2021. All machines were sold on 1st August 2021for
machines have been sold of this block.
 Capital Gains/377

for 7 80,000 on 1st

was for his personal use
a motorcar which
LHe sold
by him on lst Dec. 2009 for 1,48,000.
3.
Nov. 2021. The car was bought
Cost Indexes are-2001-02 (100),
xable
Compute t a x ai income from capital gains.
2021-22 (317)
(105) and
203
Gains Assessment Year 2022-23
Taxable Capital
Computation of
Solution

House (Long Term)

10,00,000
S a l eSales
s consideration

L e s s - Transter e x p e n s e s
Advertisernent 8,000
20,000 28,000
and Brokerage
Less- Net consideration
9,72,000
Index cost of acquisition
(a)
based on 2001-02

2,80,000x 317
8,87,600
100
Cost of improvement (2002-03)
(b
1,40,000x 317 4,22,667 13,10.267
105
|(-) 3,38,267 NIL
Long term capital loss c/f (See note)
Machinery (Short Term being a business assets)
2.
Sales consideration 3,60,000

Less- Written down value (1.4.2021) 3,00,000 60,000

Motorcar (Personal effects not capital asset) NIL
3.
Short term Capital Gain (Taxable) 60,000

Notes: Whichever is
1. Original cost 1,70,000 or value on 1.4.2001 7 2,80,000,
higher, will be taken as cost of acqui_ition.
[Link] cost before 1.4.2001 will be ignored.
treated short tem
is a depreciable asset, so profit on sale is
as
3. Machinery
capital gains.
4. Motor car is personal effect, so it is not capital asset.
it is ci.
against S.T. Capital gain
so
Long-term capital loss can not set off

CAPITAL GAIN DEPOSIT SCHEME

SPP-15
data regarding his transactions
Mihir Virani provides the following
Mr.
2021-22. Compute n
sale of his residential house for previous year Income for the
ne in the Total
amo o f capital gains to be included
Ae
Assessment Year 2022-23 8,00.000

House purchased in 1999 10.00,000

Fair Value on 1st April 2001 42,00,000

paid @ 26)
old in November 2021 (Brokerage
378/Income Tax
furnishing returm of
income for his
his incom
On 15th June 2022 (due date for the
with State Bank ofIndia

Assessment Year 2022-23) he deposited

9,00,000
Bhopa
Scheme.
under the Capital Gain Account Octoher
at Bhopal in
constructed a
residential house 2023 2
Suppose he gets the bungalow isfinan
construction ot
entire cost of
the cost of T8,50,000. The and unutilised amount ofcapita
ital gains
aforesaid deposit account
withdrawing from the
2023.
shall be withdrawn 15th November
on
tor the AssessIment Year2022.
taxable amount of capital gains
Compute the
and 2024-25.

Solution Assessment year 2022-23

Gains
Computation of Capital
42,00,000

Residential house sold (L.T.) - 84,000

41,16.000
Less- Brokerage on Selling
acquisition
Less- Index cost of
based on 2001-02

22 Index
1.4.2001x 2021
-

Value on

2001 0 2

31,70,000
317
10,00, 000 x

100 9,46,000

Less- Exemption u/s 54 (See note) Scheme

Gains deposit ()9,00,000 (9.00.000
Deposited to Capital
date of filing
of Return 46,000
beforethe due
gains
Taxable_Long Term capital
30.6.2021 belore
gain deposit scheme
on

lac in capital taxable long

He deposited R 9 also deductible. Thus
Notes: such amount is
retum, so
date of filling is 30,000.
the due A s s e s s m e n t Year 2022-23
the
term gain for
capital
2024-2025
in A.Y.
Taxable L.T. capital gain

deposit 9,00.000
to capital gains
Amount deposited

Scheme (15.6.2022) 8,50,000

construction of a new

Less- Cost of
1.11.2023
on
bungalowcompleted C a p i t a lG a i n 50,000

withdrawn by the
amount
Unutilised
15.11.2023 will be taxable
assessee on
 Capital Gains/379

SPP16 Nadkarni's
Madhukar
From
the following information com Mr.
vablec a p i t a lg a i n s

on 1:
residential houses, out of these he sold a house
taxab,
owner ot three
1. He is state
Sept. 2021 for 10,00,000. While the value is detemined by the
Govt. for Stamp Duty purpose 7 13 Lac. 50,000 were spent on brokera
and advertisement to sale the house. The house was purchased by him i
1998 2,60,000 and 35,00
March tor* paid 10,000 registration charges
spent on renovation. 80,000 wee spent by him for repairs, Interest on
and insurance premium of the house in past years.
2. He purchased Ambuja Cement Company's 12% debentures (Listed) face
value 2,50,000 at par in June 2003. These debentures were sold
for 3.82,000 during the previous year on 1st July 2021. Brokerage
72.000 was paid on sales. In 2021 he received 30,000 interest on the
debentures. He invested R 1 lac in bonds issued by Rural Electrification
Corporation on 15.12.21. CostIndex for-2001-02 was 100, 2003-04 was
109 and 2021-22 (317).

Solution:
Statement of Capital Gains Assessment year 2022-23

1. House (1long term gain)

Sales consideration as per Stamp Duty 13,00,000O

Less- Selling expenses-brokerage and advertisement 50,000

Net Consideration 12,50,000|
Less- Indexed cost of acquisition and

improvement based on 2001-02 (see note)

Cost& Improvement expensesx 2021

-

22
2001 02 Index

2,60,000 + 10,000 + 35,000

3,05,000x317 9,66,850 9,66,850 2.83,150

100
2. Debentures (long term capital gain)
Sales Consideration
3,82,000
Less- (a) Brokerage on sales 2,000
2,50.000 2,52.000
6) Cost of acquisition (see note)
1,30,000
EC 1,00.000 30,000
Less- Investment in Bonds issued by REC u/s 54
3,13,150
Taxable Long term Capital gain
380/Income Tax
Notess
.Though the house was sold for 10 Lac, but it was valued
ed for 131
Stamp Duty purpose, so sales consideration will be? 133 Lac for 13
Lac fo
(C). Current repair Lac as per
per secti
charges, interest on loan and insurance premiumsection 50
part of cost acquisition. emium aare not
2 Cost of long-tem debenture will not be indexed, because
allowed for securities and debenture. indexing is not

Calculation of
Capital Gain relating to Shares and debentures
Share and debentures are
movable assets and capital gain arising from
transfer of such securities the
shall be calculated in the following
Shares and securities shall be short tem assetsmanner if these held
assessee up to 12 months in case of more than 12 by te
months it will be Lona
tem assets.
Share sold though stock exchange after 12 months long tem capital gain
shall not be taxable, but in case of short
tem, it will be taxable.
Shares sold out side the stock exchange the capital
gain either long temor
short temm shall be taxable.
No indexation in case of debentures even then
O
long term capital assets.
OCost of bonus shares will be taken on the basis of 1st April 2001
before 1.4.2001.
if alloted
Cost of bonus share shall be taken Nil if allotted after 31.3.2001
C o s t of Right shares shall be taken on the basis of issue price by the
company.

Problems Relating to Shares and Debenture

SPP-17
M Chirag Patel invests in shares and securities. He made
made the
SHe
transactions during the previous year 2021-29
following
Cald 500 shares of Keliance industries Ltd. on 17th April 2021@7 870
(1) Mr. Gangwal. These shares
per share
to his friend were purchased by him
@7 110.
5th April2007 Deben
on
sold 13%, 40
40 Debentures
9021 sold 139
2021 (each 1,000) of Grasim
25th June,
(2)
(2)
On
Ltd. @F
1,260 These debentures were acquired by him at jac
1260.
Industries
2003.
January
on
1st
value 1ains for
gains
for the Assessment Year 2022-23. If Cost
capital
taxable

2 0 0 2 - 0 3
(105)- 2007-08 (129) and 2021-22 (317)
2007

Compute

were

Index

on
I n f l a t i o n
 Computation of Capital Gains of Mr. Pate
Assessment year 2022-2
Reliance Industries (L.T.)
S h a r e sR e l i a n e

Consideration 500 x 870 4.35,000

Sales
cost Acquisition
Index
LEsS- (a)
110x 500 =
55,000x317
129 | ( 1,35,155
2,99,845
Long term Capital Gain
2) ebentures(L term)
consideration 1,260 x 400 50,400
Sales
Less- Cost of acquisition 1,000 x 40 -)40,000 10,400
(Indexation not allowed)
Taxable Long term Capital 3,10,245
Gain
Notes:
1. Shares of Reliance Industries were sold to friend out side Stock Exchange, so
long-tem capital gain is taxable.
. Though debentures are long-tem but indexation is not allowed, hence actual
cost will be deducted against sales consideration.

SPP-18
Mr. Sanjay Patni sold the following shares during the year 2021-22-
(1) On 15th Sept. 2021 sold 2,000 equity shares of Jai Prakash Industries
160 through National Stock Exchange. These shares were purchased by
him@ 110 at Mumbai Stock Exchange on 10th April 2021. Securities
Transaction tax was paid @0.125% at the time of purchase and sale.
(2) On 10th November, 2021 sold 800 shares of TELCO @R 370 per share
through National Stock Exchange. Brokerage paid 1/2%. These shares
were purchased in 1990 @7 95.
Determine taxable income of Mr. Patni under the head 'Capital Gains' for the
Assessment Year 2022-23.
Cost Inflation Index are 2021-22 (317), 2020-21 (301) and 2001-02 (100)
Solution
Computation of Capital Gains (A.Y. 2022-23)
Industries (Short term) 3,20,000
) Equity shares of J.P.
2,20,000 1,00,000
Less- Cost of shares
370) 2,96,000
(2) Telco shares (L.T.) consideration (800
x

1,480
Less- Brokerage
2,94,520
76,000
Less- Cost of shares (800 x 95)
2,18,520
1,00,0001,18,520
Less- Exemption for share (L.T) 2,18,520
Taxable Long term capital gain
SPP-19
Mittal purchased 1,000 shares of Glaxo Ltd. @R 180 per
[Link]
Mrs.
two shares
held in
.The
in 1999.
company allotted one bonus share for every
in 1999.

1st June 980

She sold 300 original shares and 400 bonus shares @ 7
on
gha
share
2008.
Marc Fair market value as on 1st April 2001 was 200 per share.
March
021. Fair market

Compute the taxable capital gains if-

Mirs. Mital sold the shares directly to purchase i.e. outside stock exchange.
(a)
(ol Shares sold through Mumbai Stock Exchange and the securities transaction
tax have been paid.

Solution: Option (a): Direct Sale

Computation of Taxable Capital Gains
(Assessment Year 2022-23)
)Original shares (Indexbased)
Sales consideration (300 x 980) 2,94,000
cost (1.4.2001)
Less- Index

200 60,000 x 317 (-1,90,200| 1,03.800

300 x =

100

(11) Bonus shares (Without index cost)

Sales consideration (400 x 980) 3,92.000
Less- Cost of acquisition Nil 3,92,000
Total Long term capital gains| 4,95,800

Option (b) : Shares sold through Stock Exchange

and Securities
If the assessee sold his shares through Stock Exchange
term shares shall not be
Transaction Tax has been paid, then capital gain on long
taxable. Hence no need for any computation.
Computation of Capital gain on Lon term shares
Shares Shold Through Stock Exchange

shares sold (300 x 980) 2,94,000

() Original
Less- Value on 1.4.2001 - 60,000 2.34,000
300x 200
L.T. Gain
3,92,000
(2) Bonus shares (400 x 980)
Nil| 3.92,000
Less- Cost 6,26,000
Long term capital gain
Total
on shares
(-)1,00,000
term shares
Less- Exempted capital gain on long 5,26,00¢
Taxable capital gains
stock exchange, the long tem capital
gain
o t e : If the long tem shares sold through 10%
excess capital gain
shall be taxable
shall be exempted up to ? One Lac,
 Capital gain on
i If aa compan
acquisition forcompany issues right transfer of Right shares
the share shares to its
(1)
offer- Amount Right shares holder will be as under- present share
will be acquired holders The costd
costunt by
of actully paid by the assessee original share
the
share holder

excerciseRenounce acquisition. M
the
a (original
value or public issue nlder) tor
by exercising
by exer
acquiring sshares
realised the right
offer and
rights entitlement- Iflf price will be imma immaterial.
the cost by selling his original shareh
renounces it in the favouroriginal
is
taken as nil. rights of other hareholder ddoes not
shareholder
entitlement will be short-term other person, ththe amount
(3)
the cost Cost for capital gain in his handsamoas
itl of acquisition renouncee-cee- Where hands as
entitlement plus amount be purchase the
will rights renouncee acquires the
price paid to original share the right shates
SPP-20 paid to the company holder.
holder
shares
which has
company wnie has alloted alloted the ri sh tioht of
of ignls
Mrs.
share on Rachana Chhajed
sh rights shares
ratio of 1st April 2004. bought 300 shares of Bajaj
3:5@ R 150. Shee On 1sttAugust August 2013, the Auto Ltd. 7 250 250 per
January, 2022 the accepted the
the offer and thecompany
and the company
offered
oftered right
ight t shares in per
sharesOrOnin theIst
s

Chhajed renounced company again issued right

right
offer in favo of Miss. shares
company 1issued shares.
and on
lst Feb.
the
ed the ofter
2022 she sold favour
shares in ratio of
in the
Anjana forthea premium 1:1@T2 200. Mrs.
her total ofF 150 per
Compute taxable capital holdings @ 7 480 to her share
share
If the assessee for gain the brother
Assessment Year 2022-23.
2021-22 (317) choose Indexing costoption 2004-05 (113),
Solution 2013-14 (220)
The assessee
transferred
therefore Securities Transaction her shares to her brother, not through Stock
shall be in normal manner-
Tax is not paid, therefore Exchange,
calculation of capital gain
Option-(Indexation)
Computation of Capital Gains (A.Y. 2022-23)
Short term capital gain
Consideration received for renouncement of
1.1.2022 480 x 150
the right shares 480 on 72,000
on 1.4.2004) L.T. (300 x 4801
1.44,000
300 shares sold (purchased
75, 000x 317

Index cost of
acquisition 300x
250 =

113 ( 2,10,398
Long term capital loss 66,398
on
1.8.13 (180x480) 86,400
(acquired
shares sold
180 right
27,000x317 ( 38,905 47,495
150
=
220
Cost 180
x Net long term capital loss c/f 18,903 Nil
Index
Capital Gain
Short
term 72,000
Taxable