Under section 2(14), property of any kind whether movable assets, immovable assets, tangible-intangible assets, incorporated rights, held by any assessee, is a capital asset for the purpose of Income Tax Act. However, the following assets are excluded from the definition of capital assets:
i. Any stock in trade, consumable stores or raw material, held for the purposes of business or profession.
ii. Personal effects of the assessee, i.e. movable property, including wearing apparel and furniture, held for his personal use or for the use of any member of his family, dependent upon him.
iii. Agricultural land in India, provided it is not situated
a) in any area within the territorial jurisdiction of a municipality or a cantonment board, having a population of 1000 or more or
b) n any notified area.
iv. 6.5 % gold bonds, 1977 or 7% Gold bonds, 10980 or National Defense Gold Bonds, 1980,issued by the Central Government.
v. Special Bearer Bonds 1991.
vi. Gold Deposit Bonds, issued under gold Deposit Scheme, 1999.
Types of Capital Assets: Capital assets are of two types
1. Short-Term Capital Asset
2. Long-Term Capital Asset
1. Short-Term Capital Asset [Section 2(42A)]:
A capital asset held by an assessee for not more than 36 months immediately preceding the date of its transfer is known as a short term capital asset. However, the following assets shall be treated as short-term capital assets if they are held for not more than 12 months (instead of 36 months mentioned above) immediately preceding the date of its transfer:
i. Shares held in a company.
ii. Any other security listed in a recognised stock exchange in India.
iii. Units of the Unit Trust of India or units of a Mutual Fund.
iv. Zero coupon bond.
2. Long-Term Capital Asset [Section 2(29A)]:
It means a capital asset which is not a short-term capital asset.