Capital gains are those that one incurs on assets held for a short or long-term period. Both payments have different attributes and are calculated differently. Let’s understand it better.
The capital gain calculator helps to calculate your applicable capital gain taxes on your investment sold in any financial year. The investments can be taxed at long-term or short-term capital gains, depending on how long you may have invested in that asset.
Through a capital gain tax calculator, you will be able to inflate the purchase price of your assets by considering the inflation impact and calculate the taxable gain by considering the sale price.
There are two types of capital gain taxes and how the taxes are calculated between them. Below are the two types:
Short-term capital gains refer to any capital gain on selling short-term assets. It refers to any help owned by you or the taxpayer for under 36 months from the date of transfer. For shares listed in the recognized Indian stock market, the period is reduced from 36 months to 12 months for short-term capital gains.
Any investment that returns for a more extended period is called long-term capital gain. Any investment return between 1 and 3 years can be included in the long-term capital gains. The most common examples of Long term capital gains are jewellery, bonds, trademarks, or mutual funds, to name a few.
The tax calculation on both capital gains differs since the period involved differs. Below is the calculation explanation:
When using a capital gain calculator, below is the list of required information that you would have to enter to get your desired results:
After entering the information mentioned above, you can expect to get the below returns:
Below are the formulas for short and long-term capital gains:
Short-term capital gains = total value consideration - (cost of asset acquisition + cost of improvement + price of transfer).
Long-term capital gains = total value of consideration accruing or received - (indexed cost of acquisition + indexed cost of improvement + price of transfer).
The following are a few advantages of using a capital gain tax calculator:
Holding an asset for a specific period is very common, and most people deal with it. But people are unaware of the gains they make of them. Using the capital gain calculator, they can assess their gains after deducting all the taxes.