Full formGovernment & Exams
CGTstands forCapital Gains Tax
Full Form of CGT
What is CGT?
Capital Gains Tax (CGT) is a direct tax levied on the profit earned from the sale of a capital asset, such as property, stocks, bonds, or mutual funds, in India. The tax is applicable only when the asset is sold and a gain (profit) is realized, not when it is held. CGT is classified into short-term capital gains (STCG) and long-term capital gains (LTCG) based on the holding period of the asset. For example, equity shares held for more than 12 months are considered long-term, while other assets like property require over 24 months. In India, CGT is governed by the Income Tax Act, 1961, and is a key source of government revenue. It is used by taxpayers during annual income tax filing, and by investors to plan their sale strategies. The tax rate varies: LTCG on equity exceeding ₹1 lakh is taxed at 10%, while STCG on equity is taxed at 15%. Understanding CGT is crucial for students preparing for competitive exams like CA, CS, and UPSC, as it frequently appears in taxation and finance sections. The government periodically revises CGT rules to influence investment behavior, making it a dynamic part of India's fiscal policy.
CGT का फुल फॉर्म
पूंजीगत लाभ कर
Example
I sold my apartment after five years and consulted a chartered accountant to compute the long-term capital gains tax (CGT) I owed to the Income Tax Department.
CGT — frequently asked questions
What is the full form of CGT?
CGT stands for Capital Gains Tax, a direct tax imposed on the profit earned from the sale of a capital asset in India.
How is CGT calculated on property sale in India?
CGT on property is calculated by subtracting the cost of acquisition, improvement, and transfer expenses from the sale price; the resulting gain is taxed based on the holding period (short-term or long-term).
What is the difference between LTCG and STCG for CGT purposes?
LTCG (Long-Term Capital Gains) applies to assets held for more than a specified period (e.g., 12 months for stocks, 24 months for property), while STCG (Short-Term Capital Gains) applies to assets held for a shorter duration, with different tax rates for each.