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Personal effects, agricultural land in rural areas, stock, specified bonds are not capital assets.

Profits or gains from transfer of a capital asset is chargeable to tax as income from capital gains as per section 45 of the Act. The taxability depends on the residential status of the contracting parties and the tax jurisdiction too.

Considering the high impact of capital gains, the assessee has multiple options to re-invest the gains into other capital assets which is provided in the exemption sections 54 to 54GB.

Section 2(14) of the Act defines capital asset. Immovable property, jewellery, intangible assets like trademark, patents are capital assets.

Property also includes any rights in an Indian company including the management rights or controlling interest. This amendment was inserted by the Finance Act, 2012 as an explanation to section 2(14) pursuant to the land mark Supreme Court decision in Vodafone International Holdings BV v Union of India (2012) 204 Taxman 408 (SC).

In the Vodafone case, the Supreme Court examined whether the Indian income tax department can levy capital gains tax on sale of shares