Calculating capital gains tax can be done using one of the online tools designed for the purpose. When calculating capital gains tax using a calculator, the following information is to be entered:
- Sale price.
- Purchase price.
- Details of the purchase such as the date, month and year of the purchase.
- Sale details such as the date, month and year of sale.
- Investment details, if any. The capital gains could have been invested in shares, debt funds, equity funds, real estate, gold or fixed maturity plans.
Once you have entered the information, the following details will be generated towards the calculation of your capital gains payable:
- The type of investment.
- Type of gain (whether short or long-term).
- Cost inflation index of the year of purchase.
- Cost inflation index of the year of sale.
- Difference between the purchase price and sale price.
- Time between the purchase and sale.
- Purchased index cost.
- Long-term capital gain without indexation.
- Long-term capital gain with indexation.
Calculate Capital Gains Formula
Long-term capital gain = full value of consideration received or accruing – (indexed cost of acquisition + indexed cost of improvement + cost of transfer), where:
Indexed cost of acquisition = cost of acquisition x cost inflation index of the year of transfer/cost inflation index of the year of acquisition.
Indexed cost of improvement = cost of improvement x cost inflation index of the year of transfer/cost inflation index of the year of improvement.
Capital Gains Rate
The rate at which capital gains is calculated varies from year to year. In the case of long-term capital gains, individuals are taxed at 20.6% (including education cess). There are no deductions that can be availed under capital gains tax.