Long term capital asset means a capital asset held by an assessee for more than 36 months immediately preceding the date of its transfer.
However in the following cases, if Capital asset is held for more than 12 months it shall be treated as long term capital asset
- Equity or preference shares held in a company listed in recognized stock exchange in India
- Any other security listed in recognized stock exchange in India
- Units of UTI (whether quoted or not)
- Units of an equity oriented fund
- Zero coupon bonds (whether quoted or not)
- Unlisted Equity or preference shares held in a company (if transfer of such shares takes place on or before 10th July, 2014)
- Units of mutual fund specified under section 10(23D) other than equity oriented fund (whether quoted or not, if transfer of such shares takes place on or before 10th July, 2014)
An asset held for less than or for exactly 36 or 12 months will be considered as short term capital asset.
In calculation of period date of purchase will be included and date of transfer shall be excluded.
Period of holding in some cases:-
| Acquired under inheritance,will etc under section 49(1) | The period of holding of previous owner is also included. |
| Right Shares | From the date of allotment of such right shares. |
| Bonus Shares | From the date of allotment of such bonus shares. |
| Sweat Equity Shares/ESOP | Date of allotment of such security. |
| Liquidation of company | The period subsequent to date on which company goes into liquidation is excluded. |
| Shares held in amalgamated/ resulting company | The period of holding in amalgamating/demerged company is included. |
| Transfer of security in a demat account | Period of holding shall be determined on first-in-first-out basis. |
In case, a land is held by assesse for more than 36 months but the building on such land is constructed for less than 36 months, then there will be long term capital gain on sale of land and short term capital gain on sale of building. CIT v/s Citibank
If the asset is initially not held as capital asset but is a capital asset at the time of transfer then the entire period of holding from date of initial purchase is to be considered. Cit vs keshavji karsondas (1994)
