Capital Gains Tax Calculator

A Capital Gains Tax Calculator is an online financial tool that helps you to calculate the tax liability incurred from the sale or disposal of capital assets, such as stocks, ULIP funds, real estate, or investments. This tool simplifies the process of determining capital gains taxes by taking into account factors like purchase and sale prices, holding periods, and applicable tax rates. This is an essential resource to ensure accurate and efficient tax planning and compliance.

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Let us learn about a Capital Gains Tax Calculator in detail.

What is Capital Gains Tax?

Capital Gains Tax is a tax imposed by the Government of India on the profit made from selling an asset. The assets can be any of the following:

  • Stocks

  • Bonds

  • Mutual funds

  • Unit Linked Insurance Plan Funds (ULIP Funds)

  • Real estate

  • Gold

  • Property, etc.

Types of Capital Gains in India:

  • Short-term Capital Gains: These are gains arising from the sale of an asset held for less than 12, 24, or 36 months, depending on the asset. The tax rate for short-term capital gains is 15% for stocks and the same as your ordinary income tax rate for other investments.

  • Long-term Capital Gains: These are gains arising from the sale of an asset held for more than 12, 24, or 36 months, depending on the type of asset. The tax rate for long-term capital gains is 20%. However, there is a lower rate of 10% if you apply inflation indexing  on the cost of the assets.

Note: Inflation Indexing in mutual funds refers to a strategy where the returns on the fund's investments are adjusted to account for inflation. This ensures that the real (inflation-adjusted) value of your investment remains relatively stable over time.

Overview of Capital Gains Tax

Let us learn the capital gains tax rates for various investments from the table mentioned below:

Type of Investment Definition of Long Term Capital Gains Long Term Capital Gains Tax (LTCG) Short Term Capital Gains Tax (STCG) Remarks
Stocks If asset sold after 1 year from the date of purchase 10% of gain/ profit 15% of gain/ profit Long Term Tax is only applicable if total Long-term profit in a financial year exceeds Rs. 1 Lakhs.
Unit Linked Insurance Plan Funds (ULIP Funds) If asset sold after 3 year from the date of purchase 10% of gain/ profit 15% of gain/ profit Long Term Tax is only applicable if total Long-term profit in a financial year exceeds Rs. 1 Lakhs.
Equity Oriented Mutual Funds (Mutual Funds which invest at least 65% of their Portfolio in Stocks) If asset sold after 1 year from the date of purchase 10% of gain/ profit 15% of gain/ profit Long Term Tax is only applicable if total Long-term profit in a financial year exceeds Rs. 1 Lakhs.
Rest of the Mutual Funds If asset sold after 3 year from the date of purchase Gains are taxed as per your applicable income tax rates Gains are taxed as per your applicable income tax rates -
Government and Corporate Bonds If asset sold after 3 year from the date of purchase 10% of gain/ profit OR 20% of profit after adjusting for inflation Gains are taxed as per your applicable income tax rates -
Gold If asset sold after 3 year from the date of purchase 10% of profit or 20% of profit after adjusting for inflation Gains are taxed as per your applicable income tax rates -
Gold ETF If asset sold after 3 year from the date of purchase 10% of profit or 20% of profit after adjusting for inflation Gains are taxed as per your applicable income tax rates -
Immovable Property (like buildings, houses, and land) If asset sold after 2 year from the date of purchase 10% of profit or 20% of profit after adjusting for inflation Gains are taxed as per your applicable income tax rates -
Movable Property (like jewellery, royalty, and machinery) If asset sold after 3 year from the date of purchase 10% of profit or 20% of profit after adjusting for inflation Gains are taxed as per your applicable income tax rates Tax is not applicable for long-term profit reinvested in approved assets.
Privately held Stocks If asset sold after 3 year from the date of purchase 10% of profit or 20% of profit after adjusting for inflation Gains are taxed as per your applicable income tax rates -
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What is the Capital Gains Tax Calculator?

A capital gains tax calculator is a financial tool that helps you calculate the amount of capital gains tax you have to pay on the sale of an asset to the Income Tax Department of the Government of India. 

The calculator will ask you to consider the following factors for calculating the capital gains from your market-linked investment:

  • Type of asset being sold

  • Purchase price of the assets

  • The sale price of the asset

  • Holding period

  • Taxpayer's income and filing status

  • Any applicable tax deductions or credits

It will then use this information to calculate your capital gain and the tax rate that applies to your gain.

Invest & Save upto ₹46,800 per annum in taxInvest & Save upto ₹46,800 per annum in tax

How Does Capital Gains Tax Calculator Work?

A capital gains tax calculator uses the following formula to calculate Capital Gains Tax (CGT):

CGT = (Selling Price - Purchase Price) x Capital Gains Tax Rate

In this formula:

  • Selling Price: The amount you received from selling the asset.

  • Purchase Price: The original cost of acquiring the asset.

  • Capital Gains Tax Rate: The applicable tax rate on the capital gain, which can vary based on factors like your income level and the type of asset.

How to Use a Capital Gains Tax Calculator?

Follow the steps mentioned below to use a capital gains tax calculator:

Step 1: Gather the necessary information

Gather the following information to insert in the calculator:

  • Purchase price of the asset

  • Sale price

  • Any commissions or fees paid

  • Date of sale

Step 2: Choose the appropriate calculator for your situation

Choose the appropriate capital gains tax calculator as per your need. There are various calculators available for various purposes, like: 

  • Short-term Capital Gains Tax Calculator

  • Long-term Capital Gains Tax Calculator

  • Capital Gains Tax Calculator for Stocks/ Bonds/ Real Estate

Step 3: Enter the information into the calculator

The calculator will then calculate your capital gain and the amount of tax you owe.

Step 4: Plan Accordingly

Use the results to make informed financial decisions or for tax planning purposes.

Benefits of Capital Gains Tax Calculator

A capital gains tax calculator provides you with the following benefits:

  • Accuracy: Ensures precise calculations, reducing the risk of errors in tax reporting.

  • Time-Saving: Quick and efficient, saving you time compared to manual calculations.

  • Tax Planning: Helps you strategize and make informed financial decisions.

  • Compliance: Ensures adherence to tax laws and regulations.

  • Investment Analysis: Allows you to evaluate the tax implications of various investment options.

  • Records: Maintains a record of past transactions for future reference.

  • Cost-Efficiency: Often available for free online, minimizing expenses.

  • Peace of Mind: Provides clarity and confidence in managing capital gains taxes.

Wrapping It Up

A Capital Gains Tax Calculator is a valuable tool for you to provide accuracy, efficiency, and informed decision-making in managing your capital gains tax obligations. It not only simplifies complex calculations but also aids in tax planning and compliance, offering peace of mind and financial clarity.

FAQ's

  • What is the formula for capital gains tax?

    The formula for capital gains tax is: 

    Capital gains tax = (capital gain) * (tax rate)

    Where:

    • Capital gain = Difference between the sale price of an asset and its purchase price.

    • Tax rate = Percentage of the capital gain that is subject to tax. The tax rate depends on the holding period of the asset and the taxpayer's income.

  • How much long-term capital gain is tax-free?

    In India, the amount of long-term capital gain that is tax-free in 2023 is ₹1 lakh for individuals and Hindu Undivided Families (HUFs). This means that if you sell an asset that you have held for more than one year and the capital gain is less than ₹1 lakh, you will not have to pay any capital gains tax.
  • What is the capital gain exemption?

    The capital gain exemption in India in 2023 depends on the type of asset being sold and the holding period.
    • Long-term capital gains are taxed at 20% with indexation, or 10% without indexation if the asset is held for more than 36 months.

      • There is a ₹1 lakh exemption on long-term capital gains for individuals and Hindu Undivided Families (HUFs).

      • There are a few exceptions to the ₹1 lakh exemption, such as the sale of residential property.

    • Short-term capital gains are taxed at your marginal income tax rate.

  • What is the income tax slab for capital gains?

    The income tax slab for capital gains in India depends on whether the gains are categorized as short-term capital gains (STCG) or long-term capital gains (LTCG).

    Short-term Capital Gains (STCG):

    • For individuals, Hindu Undivided Families (HUFs), and some other taxpayers, STCG on listed equity shares and units of equity-linked ULIP and mutual funds are taxed at a flat rate of 15%.

    • STCG on other assets (like real estate) is added to the taxpayer's total income and taxed at their applicable income tax slab rates.

    Long-term Capital Gains (LTCG):

    • As of my last update in September 2021, LTCG on the sale of listed equity shares and units of equity-oriented ULIP and mutual funds exceeding Rs. 1 lakh is subject to a tax of 10% without the benefit of indexation.

    • LTCG on other assets (like real estate) is taxed at 20% with indexation benefits.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ

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