Hello friends, how are you all?
We had started a discussion on Capital Gain Head in the
last lecture.
And today we will expand on that discussion a little
further.
Yesterday we had just opened a little stapler pin of the
envelope.
We had discussed what is a Capital Asset.
In the last lecture we had read that if there is a transfer
of Capital Asset, your profit will be taxable in Capital
Gain Head.
And we had read what is a Capital Asset.
Today I want to talk about a differentiation.
In this chapter, there is a differentiation between short
term and long term.
Short term is short term Capital Asset.
Long term is long term Capital Asset.
Short term and long term.
Sir, why this differentiation?
Some Capital Asset is short term, some Capital Asset is
long term.
Why are you saying this?
Friends, I am saying this because
I will write short term Capital Asset here.
And this is long term Capital Asset.
This differentiation is because of the difference in their
rates.
This is taxable at different rates.
This is the first difference.
The second difference is that the value at which you buy
this asset, the symbol is minused.
Like we do, sales minus purchase.
We do this.
So, the actual value at which you purchase is minused.
But what happens in the case of long term?
What happens in the case of long term is that we increase
your purchase value a little.
You get this benefit.
What do we increase? How do we increase? Why do we increase?
We will discuss about that.
Just understand that there is a difference in these two.
There is a difference in their treatment.
This is taxable at different rates.
That is taxable at different rates.
In this, there is a different treatment of purchase cost.
In that, there is a different treatment of purchase cost.
So that the Khichdi doesn't get cooked.
That's why make a difference.
You are short term and you are long term.
Short term and long term, sir?
What do you mean?
Friends, think about short term and long term.
It will be a matter of time period.
If it is for such a long duration, then short term.
If it is for a longer duration, then long term.
Come here.
What is short term, sir?
Come to the definition.
As per section 242A, short term capital asset means
Capital asset means any capital asset held for not more
than 36 months immediately preceding the date of transfer.
Assume that you sold a capital asset today.
Example, urban agricultural land.
Sir, why so much focus on urban?
Why so much focus on urban?
Friends, remember.
Was rural agricultural land my capital asset?
The land of the village, of the old farmer?
No.
If rural agricultural land is not there, can urban
agricultural land be my capital asset?
It can, sir.
What will happen? It is there.
It is not rural.
The rest of the agricultural land will be my capital asset.
Okay.
So, if I buy urban agricultural land today and if I sell it
for 3 years, if I buy it today and if I sell it for the
next 3 years, then it will be a short term capital asset in
my hands.
If I buy it today and hold it for 3 years, if I sell it
after 3 years, then I am holding it for 3 years.
If I buy it here, then I am holding it for 1 year, 2 years
and 3 years.
I am holding it for 3 years and if I sell it here, then it
will be a short term capital asset for me.
But suppose, if I buy it here, and it has been 1 year, 2
years and 3 years, and if I sell it here after 34 years,
then it will be a long term capital asset for me.
We are looking at a time period of 36 months.
36 months, which means 3 years.
If I hold something for 3 years, then it will be a short
term capital asset for me.
Long term capital asset for more than 3 years.
Come here.
But there are some exceptions to this.
There are some exceptions for 36 months as well.
It is not necessary that if you hold that asset for 36
months, then it will be a short term asset.
If you hold that asset for 1 year, then what will it become?
If you hold it for more than 1 year, then it will become a
long term asset.
It has a limit of up to 1 year.
Here, we are talking about up to 36 months.
If you hold it for 36 months, then it is a short term asset.
Now, if you hold it for up to 1 year, then there are some
assets that will become a short term asset.
If you hold it for more than 36 months, then it is a long
term asset.
If you hold it for more than 1 year, then it is a long term
asset.
What are those assets?
Come here.
Those are listed shares.
What do you have of any company?
It is a listed company.
Where is it listed?
It is listed in the stock exchange.
The company is listed in the stock exchange.
You have listed shares of that company.
Listed shares, for example, Reliance.
Tell me about any other company.
Tell me about the top shares that are sold in the market.
SBI.
Titan.
That's it.
If you have listed shares.
What else do you have in this case?
There are zero coupon bonds.
Zero coupon bonds.
These are government bonds.
Government bonds are there.
Zero coupon.
What else do you have?
Equity.
Equity oriented funds.
You have units of those.
In this case, your time period is 1 year.
Sir, what are you saying?
I am not able to understand anything.
Sir, what are you saying?
What time are you passing?
I am saying this, friend.
I am not passing time.
Understand what I am trying to say.
What do you think about capital assets?
When you sell, capital gains.
I am telling you to divide capital assets into two parts.
One in the short term.
The other in the long term.
Why do you divide it?
Because both have different treatments.
Both have different rates.
Both have different provisions.
Okay, sir.
Now I am saying, what is short term?
Short term is any asset that you buy today.
If you hold it for 3 years.
The date on which you will sell it.
Before that, did you have it for 3 years?
Yes, I had it.
So, what will it become for you?
Short term.
If you hold it for more than 3 years.
What will it become?
Long term.
But the government said.
We will not let you go so easily.
In some cases, they said.
Don't check for 3 years.
In some cases, check for 12 months.
I mean, check for 1 year.
What are those cases?
These are the cases.
That you have shares of a company.
And if you hold it for up to 1 year.
So, what will you have for up to 1 year?
In that case, short term capital assets will be formed.
Or you have zero coupon bonds.
If you hold zero coupon bonds.
For up to 1 year.
In that case, short term capital assets will be formed.
Or you have equity oriented.
Equity oriented mutual funds.
Equity mutual funds.
If you hold it for up to 1 year.
In that case, short term capital assets will be formed.
Is the point clear?
Shall I move ahead?
In some cases, check for 36 months.
Generally, you have to check for 36 months.
If it is up to 36 months.
Then short term.
After that, long term.
But if there are listed shares.
If there are zero coupon bonds.
In mutual funds, the equity oriented units.
In that case, 1 year.
There is one more case.
In that, you have to check for 2 years.
What is that?
That is land and building.
You buy a property.
And if you hold the property for 2 years.
In that case.
If you hold it for up to 2 years.
Then short term capital assets.
If it is more than 2 years.
Then long term capital assets.
Up to 2 years, short term.
Up to 2 years, long term.
Why are we doing this?
Will someone tell me why are we doing this?
We are doing this because.
The short term and long term provisions of both.
Are different.
And what is the second one?
In this, 24 months are there.
24 months.
What is the second one?
Unlisted shares.
Sir, what is this unlisted shares?
What is this unlisted shares?
We have seen shares like Lions.
SBI.
This must be listed.
This is listed in the stock exchange.
So, what is unlisted?
Sir, the shares which are not listed in the stock exchange.
What is that called?
Unlisted.
Sir, you have already said this.
That those which are not listed are unlisted.
What is the meaning of this?
Sir, the meaning of this is.
The company which has not listed itself in the share market.
Has not listed itself in the stock exchange.
That.
Is called an unlisted company.
In this world, you will see many companies.
But in the share market.
Those which are listed in the stock exchange.
Those are very less.
Have you heard of Shadi.com? That is also a company, but it
is not listed anywhere.
You must have seen the headphones of boats, but it is not
listed anywhere.
Jeevansathi.com is not listed anywhere. There are many such
companies.
Have you heard of Sahara? Sahara, there used to be a Sahara
group,
Indian cricket team's dress-up was also called Sahara.
What is Sahara? It is an unlisted group, unlisted companies.
It is an unlisted company in India.
There are many such companies which are unlisted, which
have not taken money from the public.
So, in that case, if you hold that, as I said, I bought
your equity.
The founders who come to Shark Tank India are all unlisted.
It is a company, but it is not listed in the stock market.
It is not listed in the stock exchange.
So, I bought your equity.
Now, suppose Anupam Mittal is sitting there and he has
bought his equity.
Now, for him, his equity has become a capital asset.
Now, when he goes to sell his equity in the market, after 2
years, 3 years, 4 years, he will have to see whether it is
a short-term asset, equity or a long-term asset.
So, in that case, because it is an unlisted share, the time
period will be 24 months.
If Mr. Mittal holds it for 24 months, short-term.
If he holds it above that, then long-term.
Why is this happening?
Why are there different differences?
Because the tax rates of both are different.
This is the point, short-term and long-term.
Because we are talking about short-term and long-term.
So, to see short-term and long-term, we have to see what
our period of holding is.
Period of holding means how long we have held it.
Since when do we have to take that holding period?
Generally, when I buy an asset and until I don't sell it,
what happens to me?
Holding period.
For example, today is 1st January, 2020.
And I hold it for 2 years.
I hold it till 1st January, 2022.
So, in general terms, what is my period of holding? 2 years.
If it is 2 years, then I will compare which asset it is.
If it is a listed share, then if it is above 1 year, then
long-term.
If it is a land and building, then if it is above 2 years,
then long-term.
If it is any other asset, then I will have to see it for 36
months.
So, I will tell you how to calculate the period of holding.
How to see the period of holding?
What is the general case?
You bought an asset and until you don't sell it, you have
held it.
Check that period.
But, my dear, there are some cases when you get an asset as
a gift.
For example, you are sitting in 2020 or 2022.
And your grandfather gifted you a property.
He gifted you a land worth Rs. 5 crores.
And that land was his ancestral land which he had held for
the last 75 years.
Now, the confusion arises here.
What is the period of holding?
When that land comes to you and you sell that land, what is
the period till then?
When your grandfather bought that land and gave it to you
as a gift, what is the period till then?
What is the period till then?
This is the point.
The confusion arises here.
You bought some shares of a company.
And let's assume that the company is divided into two parts.
And the company gives you the shares of those two parts in
return.
For example, you bought shares of an A-Limited company.
In future, the company will divide into two parts.
That our operations will be different.
These operations will be different.
Do you want to hear another example?
You bought shares of a Reliance company.
And in future, the Reliance company will divide its
operations into two parts.
That the shares of Jio and Reliance Industries are
different.
The person who bought shares of Reliance, for example, a
share worth Rs.
1000, he will get shares of Reliance worth Rs.
And he will get shares of Jio worth Rs. 500.
Now, if I sell shares of Jio in future, what will be my
period of holding?
When I bought shares originally, or when the company
converted them.
These problems arise.
Somewhere, these problems,
SSE is facing, that which period of holding to buy.
Because from the period of holding, my classification will
be, is it a short-term asset or a long-term asset?
There will be a difference in tax rates.
So, now we will discuss, how to check the period of holding.
What to do?
Friends, come with me to the screen.
Mr. Director, you didn't switch on the light today.
It's okay.
Come with me.
Wait.
We will take a break when we take a break.
Come with me to the screen.
Today, our Mr. Director is a little lost.
Actually, I will tell you a good news, that Mr.
Director has passed his exam with very good marks.
He has qualified for both,
MCOM and MBA exams.
And in his income tax paper, he has got 79 marks.
So, he sits in our classes and that's why he has got good
marks.
Mr. Director, if you want to come to the screen, if you
don't want to come, our Mr.
Director is a little shy.
It's okay.
Please clap for our Mr. Director.
Let's see, how much benefit we get here.
See, this is the period of holding.
12 months, 24 months, 36 months, he has classified.
Nothing else.
Whatever I told you, it's the same thing.
Now, come here.
Determination of the period of holding.
See, for example,
I was telling you about Dadaji's case.
He is discussing here, that where the asset becomes the
property of SSE by 49-1.
What is 49-1?
We will discuss about that.
In that, the gift one comes.
So, in that, period for which the asset was held by the
previous owner shall be included.
Means, who was the previous owner of that property?
I am the current owner.
Who was the previous owner?
It was my grandfather.
So, whatever he has held, he has held for 75 years.
That has to be included.
But whatever I have held, that will also be included.
He held for 75 years.
Include that.
I held for 2 years.
Include that.
Total period of holding 77 years.
77 years.
How much do we see in land and building? 2 years.
We have just discussed.
Unlisted shares and 2 years in land and building.
So, because it is 77 years, more than 2 years, it will
become a long term capital asset whose treatment will be
done in a different way.
This is it.
This is all.
These are some points in this.
You can see.
Demerger happens of any company where the share in the
Indian company which is the resulting company, becomes a
property in consideration of demerger.
Demerger happens.
Reliance has 2 parts.
Jio is different and Reliance is different.
So, how do I check Jio's holding?
Period for which shares were held by the SSE in the
demerged company shall be included.
The time period for which you gave Reliance's original
shares, that will also be included in your time period.
So, these are some points.
You can read it directly.
There is no need to remember much.
Because generally, there are not many points of use.
If you ever want to check the period of holding, open your
notes once.
You will get to know.
Generally, what happens?
There are 2-3 cases.
Generally, you have bought a property and you sell that
property.
This is one case.
Another case is that you get a property from a gift or
property.
You sell it.
These are 2-3 cases generally.
In practical life, if you look at jobs, these are the cases.
Period of holding will be checked in this way.
This was the point.
Is the point clear?
So, what did we learn in today's lecture?
What is short-term capital asset?
What is long-term capital asset?
Period of holding has to be checked.
1 year, 2 years, 3 years.
What are the different cases?
Short-term rates are different.
Long-term rates are different.
Provisions of both are different.
Because of this, we have to classify both separately.
In the next lecture, we will take this topic further.
Till then, do the revision.
Thank you very much for this.
Thank you.