Capital Gain/Loss

Capital gain is the profit that you earn by selling a capital asset such as stock, jewelry, or real estate for more than its initial purchase price.

Suppose you bought the share of company X for Rs. 100 and a year later you sell it at Rs 130 - the profit of Rs 30 earned here after selling the stock is called capital gain.

Capital loss, on the other hand, is the opposite. If you sold the Company X stock for Rs 80 - the Rs 20 loss will be termed as ‘capital loss’.

Depending on the duration, capital gains can either be short-term or long-term.

Since profits are categorized as an ‘income’, the profit that you make on selling the capital assets is liable for taxation under ‘capital gains tax’.