Posted November 21, 2021 by MaxworthRealtyReviews

Every asset that an individual generally possesses, be it jewellery, shares, gold or property, is liable to be sold with a certain amount of gain/loss.

The tax implications on the value of gains or loss emerging from the sale of these assets or possessions differ, depending on the holding period of the asset. So, everyone should be aware of the tax liability on their assets and also, should know how to calculate capital gains tax. Let us first understand what capital gain and capital gains tax means.


Any profit or increase in a capital asset’s value is its capital gain. This gain is realized when these possessions are sold and can be further categorized into short-term (one year or less) capital gain and long-term (more than one year) capital gain. These gains must be claimed on income taxes.

Short-term capital gains are such gains occurred from the assets held for one year or less and the Long-term capital gains are the ones occurred from the securities held for more than one year.


Any profit that occurs from the sale of a capital asset is called capital gain and the tax paid for that profitable amount is called capital gains tax. The capital gains tax is dependent solely upon the type of capital gain. The short-term capital gains tax is applied on the securities that are held for a shorter duration period of less than 36 months whereas the long-term capital gains tax is applied on the securities held for a longer duration of more than 36 months.


Capital gains tax on the sale of property is calculated differently for the two types of capital gains.

The calculation of tax on short-term capital gains is uncomplicated and straightforward. In case of short-term capital gains tax, the gain is added directly to the total income of the individual to get the calculated income tax based on the tax bracket the individual belongs to.
The calculation of tax on long-term capital gains is difficult as it also takes inflation into account while evaluating the tax. The inflation is added due to holding of the property for a longer time.

The capital gains tax on the property can be calculated with the help of two different formulas, applicable to two types of capital gains.

For Short term capital gains tax on property
The formula applicable to the short term capital gains tax is;

Short-term capital gain = Full value consideration – (cost of acquisition + cost of improvement + cost of transfer)

For Long term capital gains tax on property
The formula applicable to calculate long term capital gain tax is;

Long-term capital gain = Full value of consideration received or accruing – (indexed cost of acquisition + indexed cost of improvement + cost of transfer),


Indexed cost of acquisition = cost of acquisition x cost of inflation index of the year of transfer / cost inflation index of the year of acquisition

Indexed cost of improvement = cost of improvement x cost inflation index of the year of transfer / cost inflation index of the year of improvement

Full value consideration is the consideration that is received or to be received by the seller after selling his property.

Cost of acquisition can be defined as the value for which the property was obtained by the seller.

Cost of improvement is defined as the additional charges of a capital nature sustained in making any additions or modifications to the property by the seller.

With Maxworth Realty India Reviews get detailed information on the capital gains and capital gains tax. Refer to the Maxworth Realty reviews to get the best property prices and the most accurately calculated income tax on your assets to save you from extra expenses.


Are Capital gains applicable to the inherited property?
No. The Capital Gains Tax is only applied to the profit that an individual makes by selling a property or an asset. Since, there is no sale involved in the case of an inherited property, only a transfer of ownership such properties are not liable to Capital Gains tax.

How are capital gains taxed?
The capital gains are taxed differently for long-term and short-term capital gains. The short-term capital gains are taxed at standard income based on tax filing status and the long-term capital gains are taxed at a lower rate than the regular income.

What happens if I sell a gifted or inherited property?
In case you sell a property that you did not buy in the first place, you are liable to pay capital gains tax on it. In such cases, the cost of purchase is calculated on the basis of the cost to the previous owner, indexed to the year of purchase.

About Company – Maxworth Realty India Ltd
Maxworth Realty Reviews is one of the leading land developers in Bangalore. Since inception, we have created a niche in the real estate market, as one of the finest developers in Bangalore. With steady efforts and dedication, we have delivered an impressive list of prestigious projects that have provided supreme value and total satisfaction to each of our customers. Sincere commitment to understand customer needs and interpret them in innovative ways, has enabled us to continuously offer living spaces that are truly special. We are proud to hold an unblemished record of delivering on promises and our strict adherence to business ethics has earned us an enviable reputation in the real estate market. Maxworth realty CEO – K. Kesava, a young MBA himself, having fresh thoughts & clear vision, it’s more than just a team who sees one common dream and does one common thing i.e. to guide our clients to reach out for their dreams. Our steady effort and dedication has earned us the reputation of being one of Bangalore’s finest developers, with an impressive list of prestigious projects that have delivered supreme value and total satisfaction to each one of our customers, irrespective of the size. Enjoying lion’s share in the real estate space and a long list of awards and accolades stand as the testimony to the fact that Maxworth realty Reviews is one of the most trusted names in real estate market.
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Last Updated November 21, 2021