According to Section 48 of the Income Tax Act, 1961, the income chargeable under the head “Capital Gains” is determined as follows:

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.”

How Is This Gain Computed?
The gain is calculated by taking the full value of the consideration (i.e., the sale price or the value received) and subtracting:

• Cost of Acquisition: The amount you originally paid for the asset.

• Cost of Improvement: Any additional costs incurred to enhance or upgrade the asset.

• Expenditure on Transfer: Any expenses directly related to the sale (such as brokerage fees or legal charges).