How are capital gains treated in the Income Tax Act?
Either as short-term capital gains or long-term capital gains, depending on the number of years it is held. What is the tax on capital gains? If cost-inflation indexation is considered, then it is charged at 20 per cent whereas it is 10 per cent if cost-indexation is not considered. NRIs pay capital gains at the rate of 10 per cent. How is inflation taken into account? Starting with 1981 – 82 as the base year, the Reserve Bank of India notifies the Cost Inflation Index every year and the income tax department uses this figure in its calculations.
