What Does the Period of Holding Capital Asset Mean?
The holding period for capital assets refers to the period during which a taxpayer has held a capital asset. The tax liability of any capital asset depends on the holding period. According to the period of holding, the capital assets are categorized into two: short-term capital assets and long-term capital assets. Any capital asset that has been held for a shorter duration will be deemed as a short-term capital asset, which will be liable for short-term capital gain. Any capital asset that has been held for a long-term period will be classified as a long-term capital asset. It will be liable to taxation with the benefit of indexation.
What is the Need to Calculate the Holding Period of a Capital Asset?
According to the Income Tax Act, the tax rates for short-term capital gains and long-term capital gains differ. So, it is important to check whether the capital gain is long-term or short-term. This categorization of capital assets is based on their period of holding. To calculate the tax implications on a capital asset, one must know the period of holding, which can be easily calculated using our online holding period calculator for capital assets.
What are the Different Types of Capital Assets?
The taxpayer has to pay capital gains on various types of capital assets, which are as follows:
- Gold
- Units of UTI
- Zero-coupon bonds
- Equity mutual funds
- Debentures or bonds
- Listed and unlisted shares
- Debt-oriented mutual funds
- Immovable property, like land, buildings, agricultural lands, etc.
What is the Period of Holding for Short-Term Capital Gains?
The holding period for short-term capital gains is different for various assets:
- For immovable properties/ unlisted shares: the holding period must be less than 24 months to qualify as short-term.
- For listed shares, equity mutual funds, zero-coupon bonds, or units of UTI: the holding period must be less than 12 months to be eligible to qualify as short-term.
- Other Assets: For other assets, the period of holding must be less than 36 months to qualify as short-term.
What is the Period of Holding for Long-Term Capital Gains?
The holding period for long-term capital gains is different for various assets:
- For immovable properties/ unlisted shares: the holding period must be less than 24 months to qualify as long-term.
- For listed shares, equity mutual funds, zero-coupon bonds, or units of UTI: the period of holding must be more than 12 months to qualify as long-term.
- For other assets: the period of holding must be more than 36 months to be considered as long-term.
How to Calculate the Period of Holding of Capital Assets?
The holding period of capital assets will be computed based on their date of acquisition, which is essentially the date the asset was purchased, and the date of sale or transfer of the asset. The following is an example of the above-mentioned statement:
| Date of Acquisition |
08.01.2019 |
| Date of Transfer |
10.12.2022 |
| Holding Period |
More than 2 years |
| Type of Capital Asset |
Long Term |
| Final Result |
(The holding period of immovable property exceeds 24 months, so it will be considered as long-term assets.) |
How to Use Savetaxs Period of Holding of Capital Asset Calculator?
Savetaxs period of holding of capital asset calculator is an easy-to-use online tool. Our tool can be accessed anytime, anywhere, to determine the nature of a capital asset and to check whether it is a short-term capital asset or a long-term capital asset. No need to have any extra skills, simply provide the date of asset acquisition and the date when you transfer or sell the capital asset. These are the only requirements, and within a few seconds, our calculator will provide you with the accurate period of holding.
What are the Requirements to Use Savetaxs Holding Period of Capital Asset Calculator?
There are no complex requirements to use our online calculator. To use our online calculator, an individual must know the date of acquisition of the capital asset and the date of sale of the capital asset. This two information are the only basic requirements to use our tool. With the help of this information, our capital asset calculator will compute the holding period of the respective capital assets.
What are the Benefits of Using Our Period of Holding of Capital Asset Calculator?
Using our capital asset holding period calculator is straightforward and easy. You save time and effort both as compared to doing manual calculations, and also eliminate the risk of errors. Here are a few more benefits of using our online tool:
- Quick Results: Instantly determine within seconds whether your gain is Short-term capital gains (STCG) or a Long-term capital gain (LTCG) without providing any comprehensive details.
- Saves time and Effort: No stress of making any errors that one might make during manual calculations. Avoid confusion, simply enter your acquisition and sale date, and get the final result within the blink of an eye.
- Cover Multiple Types of Assets: Our tool covers numerous capital assets, including equity shares, mutual funds, bonds, unlisted shares, etc. Especially helpful for NRIs who need clarity on the holding period before transferring or reinvesting their gains as per the Indian law.
- User-Friendly and Cost-Free: The tool has a clear and user-oriented interface, making it easier for both tax professionals and individual investors to use the calculator and compute the holding period, and that too without spending a single penny.
To Conclude
Calculating the holding period is vital for two main reasons: returns and taxation. The tax charged on specific assets is computed based on the duration of the investment. Using our online capital asset holding period calculator can help you easily determine the nature of your capital gains, all for free. You can have an idea of how your capital gains will be taxed in advance, which is particularly helpful for NRIs who need clarity on the holding period of their assets as per Indian laws before selling them.
