Capital Gain
The profit made when a capital asset is sold for more than its cost of acquisition.
Formula
Capital Gain = Sale Consideration - Cost of Acquisition - Transfer Expenses
Unit
₹
In depth
A capital gain arises only on sale; an unrealised rise in price is not a gain in any legal or tax sense, however satisfying the screen looks. In India, listed equity held for more than twelve months yields a long-term capital gain taxed at a lower rate, while a holding of twelve months or less yields a short-term gain taxed higher. Transfer expenses such as brokerage are deductible, but securities transaction tax is not. Confusing capital gains with dividend income matters, because the two are taxed under different heads and at different rates.
Worked example
Buy 100 shares at ₹400 (₹40,000) with ₹60 of brokerage, and sell at ₹550 (₹55,000) with ₹80 of brokerage. Capital gain = 55,000 - 40,000 - 60 - 80 = ₹14,860. Only this realised figure is taxable.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Capital Gain” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.