The Capital gains is basically classified into 2 categories:
- Long-Term Capital gain: in case the asset is owned for more than 3 years continuously, it is considered as a long term capital asset. The gain or profit earned by selling such capital assets is called as long-term capital gains. In case of equities and mutual funds, long term capital gains apply if the units have been held for at least 1 year.
Other capital assets that are classified as long term capital assets if period of holding exceeds 12 months include:
- Equity shares that are listed in any stock exchange
- The units of equity oriented mutual funds
- Any listed debenture or government security
- Units of UTI & Zero Coupon Bonds