Section 48 of the Income Tax Act, 1961 provides the basic formula for computing capital gains:

Section 48 – Computation of Capital Gains:
“The income chargeable under the head ‘Capital Gains’ shall be the difference between the full value of consideration received or accruing from the transfer of a capital asset and the cost of acquisition of the asset and the cost of any improvement to the asset, as reduced by the expenditure incurred in connection with the transfer.”

Holding Period Criteria:

• Listed Equity Shares/Equity Mutual Funds: Assets held for 12 months or less are classified as short-term.

• Immovable Property (land, buildings): Assets held for 24 months or less are considered short-term.

• Other Assets (e.g., jewelry, debt funds): Generally, assets held for 36 months or less fall into the short-term category.

Note: Although Section 48 does not explicitly define “short-term” or “long-term” capital gains, the classification depends on the holding period prescribed for various asset types under the Act and subsequent notifications.