<h4>Understanding Capital Gain Tax</h4><p>A <strong>capital gain</strong> is any profit or gain that arises from the sale or transfer of a <strong>capital asset</strong>.</p><p>This profit is considered a form of <strong>income</strong> and is therefore subject to taxation.</p><h4>When is Capital Gain Tax Paid?</h4><p><strong>Capital gain tax</strong> is levied on the amount of profit in the year in which the transfer of the <strong>capital asset</strong> takes place.</p><div class='key-point-box'><p>Tax on <strong>capital gains</strong> is triggered only when an asset is sold, or "<strong>realised</strong>".</p></div><h4>Types of Capital Gains</h4><p>Capital gains are broadly classified into two categories based on the holding period of the asset:</p><ul><li><strong>Long-Term Capital Gains (LTCG)</strong></li><li><strong>Short-Term Capital Gains (STCG)</strong></li></ul><h4>Long-Term Capital Gains (LTCG)</h4><div class='info-box'><p>This applies to assets held for a <strong>specified period</strong>, which is generally <strong>over 36 months</strong>.</p></div><p>For most assets, if held for <strong>more than 36 months</strong>, the gains are classified as <strong>LTCG</strong>.</p><h4>Short-Term Capital Gains (STCG)</h4><div class='info-box'><p>Any asset held for <strong>less than 36 months</strong> is termed a <strong>short-term asset</strong>.</p></div><p>There is a specific duration for <strong>immovable properties</strong> that differs from the general rule.</p><div class='info-box'><p>In the case of <strong>immovable properties</strong> (e.g., land, building), the duration for it to be considered short-term is <strong>24 months</strong>.</p></div><h4>Reducing Capital Gains Tax Liability</h4><p>The total amount of <strong>capital gains</strong> can be reduced by offsetting <strong>capital losses</strong>.</p><div class='info-box'><p>A <strong>capital loss</strong> occurs when a taxable asset is sold for less than its original purchase price.</p></div><p>The final taxable amount is known as the "<strong>net capital gains</strong>," which is calculated by deducting any <strong>capital losses</strong> from the total <strong>capital gains</strong>.</p>