Individual

Formula Sale Price Less Cost being Higher of: Cost I paid for it Fair Market Value (FMV) as on 31.1.18  (but  where I use the FMV option, I can’t take the Cost to be higher than sale price. Therefore, where FMV exceeds Cost I paid for it, I restrict such FMV to my sale price […]

Why index. Just as Government announces DA (twice annually) to cover inflation, Government announces an Inflation Index annually to cover inflation in cost over time. So our cost of long term assets is always kept in reality to cover inflation. Cost Inflation index  is announced every year. We find Indexed cost by formula Index Cost

The Formula We do the Formula Sales Less Indexed Cost There are a few variants on the formula we come to later. But first explaining the formula. Sales- Is the price we get. We can reduce any sale expenses from Sale. Like brokerage paid. Cost- Cost includes both cost to acquire and cost to improve.

Capital Gains has its formats or varieties, in fact two of them called: Short Term, and Long Term Simply said, its based on assets I sell, which are Short Term Assets (call as Short Term Capital Asset) and Long Term Assets (call as Long Term Capital Asset). This long and short is just a period

Asset is any thing of value that I own, it could be an immovable property, an investment such as shares on mutual funds. But I don’t count personal effects as assets (like the very special tennis racquet I have, or my antique fur coat or my old car, or furniture). But still valuables are counted

When I sell an asset of mine, there’s a gain (or even loss) over its cost, that’s called capital gains. Simply said, it is what I get (Sales) less what I paid for it (Cost).

The objective of this module is to have a somewhat better understanding of what and how is covered under the Capital Gains category of income. So we intend to go the following learning steps: What is Capital Gains What’s an Asset Varieties of Capital Gains-The Long Term and the Short  Term How do we work