Many of you have confronted a problem regarding the difference between short term capital gain and long term capital gain tax. If there is something important about it which you should know? If there is something which can help to avoid this tax? Here, this blog is being written by me in order to convey the essential knowledge regarding this topic. Let’s start with the introduction of Long Term Capital Gain.
I will try to elaborate in a simple way. Suppose you purchased a house worth 12 lakh and sold it in 24 lakh. It means you have earned a profit of 12 lakh after holding this property for a particular time. This profit is called capital gain means you made a profit by buying and selling on the property. Let’s come to know about the property comes under long term capital. It can be gold, mutual fund, shares, property and painting etc.
The profit and loss depends upon the recent market condition. It the prise are rising, then you will definitely earn a huge profit on selling your property. If it’s talked about the tax rate of Long Term Capital Gain, then it is fixed at 20%. On the other hand, the long-term capital gains belongs to shares or equity mutual fund approach 0% tax rate.
Another important thing about the above mentioned topic is that the long term capital gain of the property is a total number of 36 months. In case, if you go to sell this property after the period of 36 months, then the profit will be counted in long-term capital gains. On the other hand, if the property is sold within limited time of 36 months of purchase, this profit will fall in short-term capital gains.
Along with excluding cess and surcharge, Long Term Capital gains consider a tax of 20%. Whenever you go to sell your property, you must consider all the factors belong Long Term Capital Tax. Following the formula of Long term Capital Gains = cost of selling a property – Indexed cost of acquisition can help you to calculate the Long Term Capital Gain Tax on Residential Property.