In order to prevent and identify illegal activities like money laundering, terrorist funding, and other financial crimes, the banking industry relies heavily on the Know Your Customers (KYC) procedure, which entails tracking and analyzing financial transactions. At PCIAI, we present to you Know Your Terms “KYT”, providing you a detailed description of various Terms used in financial markets.
I n simple terms, Capital Gains Tax (CGT) is a tax levied on the profit you make when you sell a capital asset — such as property, stocks, bonds, gold, or mutual fund units — for more than its purchase price. The profit, known as a capital gain , is the difference between the sale price and the purchase price (also called the cost of acquisition). You don’t pay tax when you own an asset — the tax only applies when you sell it and realize a profit. For example: If you bought shares worth ₹1,00,000 and sold them later for ₹1,50,000, the ₹50,000 gain is your capital gain , and you’ll be taxed on it depending on the type of asset and the holding period. TYPES OF CAPITAL GAINS The government differentiates between short-term and long-term capital gains based on how long you hold the asset before selling it. Short-Term Capital Gains (STCG) These arise when an asset is sold within a short period — typically: For listed equity shares or equity mutual funds: held less than 12 months . F...
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