Question

What is Capital Gains. Distinguish between long term & short term Capital Gain.​

Answer 1

Answer:

Simply put, Long Term Capital Gains (LTCG) are the capital profits from long term investment of the assets while Short Term Capital Gains (STCG) are gains earned from sale of short duration assets. For example, the minimum holding period for Equity Funds is 1 year so as to be counted as Long Term Investment.

Answer 2

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Capital gain is the profit one earns on the sale of an asset like stocks, bonds or real estate. It results in capital gain when the selling price of an asset exceeds its purchase price. It is the difference between the selling price (higher) and cost price (lower) of the asset.

Capital gains are common on assets such as real estate, stocks, and mutual funds. The IRS collects taxes on capital gains depending on how long you've owned the asset. Different tax rates are applied to short-term capital gains—meaning gains on assets held less than one year—than are applied to long-term capital gains.

When you sell an investment for more than you paid for it, your profit is considered a capital gain. If you've held the asset for a year or less, that's a short-term gain. Any profit made after that time period is considered a long-term gain.

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