![]() Other types of events besides sales can also give rise to a "realization." For instance, property that is involuntarily converted or taken by the government, or over which you grant an exclusive use right to others, may be treated as sold. For this reason, many real estate investors will refinance properties rather than sell them. For example, loans against your capital asset don't give rise to a realization event or capital gains tax. ![]() As a result, capital assets can continue to appreciate (increase in value) without becoming subject to tax as long as you continue to hold on to them. When Are Capital Gains Taxed?Ĭapital gains are taxed in the taxable year in which they are "realized." Your capital gain (or loss) is generally realized for tax purposes when you sell a capital asset. So, for all practical purposes, this type of business property is treated as if it was a capital asset. Plus, although real or depreciable property used in a trade or business is not a capital asset, gains from the sale or involuntary conversion of them may nonetheless be treated as capital gains if they were held for more than one year. ![]() ![]() This may be done by bringing the two at par either by treating investments in non-equity oriented MF schemes as long term, if they are held for more than 12 months, or increasing the minimum holding period for direct investment in listed debt securities and zero-coupon bonds to 36 months to qualify as long-term capital asset.ĭon’t miss out on ET Prime stories! Get your daily dose of business updates on WhatsApp.In addition, intellectual property (e.g., a patent invention model or design secret formula or process copyright literary, musical, or artistic composition letter or memorandum, etc.) is not considered a capital asset if it's held by the person who created it or, in the case of a letter, memorandum or similar property, the person for whom it was prepared or produced. The holding period for long-term capital gains for direct investment in listed debt securities/and zero-coupon bonds (listed or unlisted) and for investment through debt mutual funds should be harmonised and made uniform. The industry body has suggested that mutual funds should be allowed to launch pension-oriented MF schemes, 'Mutual Fund Linked Retirement Scheme', with similar tax benefits as applicable to National Pension Scheme (NPS). It has recommended that all registered insurance companies be permitted to outsource the fund management activities to registered Asset Management Companies (AMCs) and the AMCs be permitted to provide fund management/asset management services to the insurance firms. It has been further proposed that investment of up to Rs 1.5 lakh under DLSS be eligible for tax benefit, subject to a lock-in period of five years (just like tax saving bank fixed deposits).Ĭurrently, equity-linked savings schemes qualify for tax benefits under Section 80 CCC of the Income Tax Act for an investment limit of up to Rs 1.5 lakh in a fiscal year. The industry body has requested that mutual funds should be allowed to introduce low-cost, lower-risk tax-exemption-linked debt-linked savings schemes (DLSS) on the lines of equity-linked saving schemes (ELSS). Also, it has been proposed that intra-scheme switches - switching of investment within the same mutual fund scheme - are not regarded as "transfer" and the same should be exempt from payment of capital gains tax.
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