Long Term Capital Asset and Short Term Capital Asset

Long Term Capital Asset

Any capital asset held by the taxpayer for a period of more than 36 months immediately preceding the date of its  transfer will be treated as long-term capital asset.

Short Term Capital Asset

Any capital asset held by the taxpayer for a period of less than 36 months immediately preceding the date of its transfer will be treated as short-term capital asset.

Exception To General Rule

In following cases, period of holding shall be 12 months -

a) Shares listed on recognized stock exchange in India.

b) Units of equity oriented Mutual Funds.

c) Listed Securities like Debentures and Government Securities.

d) Units of UTI.

e) Zero Coupon Bonds.

This means that in case of above 5 Capital Assets, if period of holding is more than 12 months, then it is a long term capital asset and if period of holding is less than 12 months, it is a short term capital asset.

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