100 FAQ's on Basic Finance
Module Units
- 1. 100 Most Asked Finance Questions
- 2. When and why should you start saving?
- 3. Have you ever thought about how much you should save every month?
- 4. How is investment different from Savings?
- 5. When to start investing? What are the steps in the investment process?
- 6. What care should you take while investing?
- 7. What are various options available for investment?
- 8. What is meant by Interest?
- 9. How Does Inflation Affect Interest Rates?
- 10. What is Simple Interest?
- 11. What is Compound Interest?
- 12. Why 0% is not really 0% in EMI schemes?
- 13. What is Return?
- 14. What is the difference between return and interest?
- 15. What are the types of Asset Classes?
- 16. What is a PAN Card and its importance?
- 17. What are the types of bank accounts in India?
- 18. How to select a suitable savings bank account?
- 19. What is a Credit Rating?
- 20. What is a MAB (monthly average balance) and how does it affect you?
- 21. What is the maximum EMI I can service?
- 22. What is a credit card and how to use it?
- 23. What is credit score (CIBIL score) and importance of credit history?
- 24. Pay off credit card debt or Invest?
- 25. Meaning & usage of NEFT / RTGS / IMPS
- 26. What is a Bond?
- 27. What is a Derivative?
- 28. What is a Mutual Fund?
- 29. Public Provident Fund (PPF)
- 30. Employees Provident Fund (EPF)
- 31. National Savings Certificate (NSC)
- 32. Post Office Monthly Income Scheme (PO MIS)
- 33. Senior Citizen Saving Scheme (SCSS)
- 34. Kisan Vikas Patra (KVP)
- 35. Company Fixed Deposits (FDs)
- 36. RBI Savings Bonds
- 37. Capital Gain Bonds or 54 EC Bonds
- 38. Sukanya Samriddhi Scheme (SSS)
- 39. Non-convertible Debentures (NCDs)
- 40. Coupon Bearing bonds
- 41. Tax-Free Bonds
- 42. New Pension Scheme (NPS)
- 43. Atal Pension Yojana (APY)
- 44. What is meant by a Stock Exchange?
- 45. What is an Index?
- 46. What is a Depository?
- 47. What is Dematerialization and what are the benefits of having a demat account?
- 48. What is an ASBA facility and when can you use it?
- 49. What is meant by Securities?
- 50. Rights Issue Shares
- 51. Bull and Bear markets
- 52. Stock Split & Bonus Shares
- 53. Pay-in and Pay-out & Auction
- 54. Buyback of Shares & Open Offer of shares
- 55. Book-closure/Record date & Ex-Date
- 56. Where to find the stocks related information?
- 57. What makes stock prices go "up" and "down"?
- 58. Dividend & Dividend yield
- 59. What is a Clearing Corporation?
- 60. Rolling Settlement
- 61. How does one decide to buy and sell any equity share?
- 62. What are the various types of the risks once I start trading?
- 63. What is an Overvalued Stock or an Undervalued Stock?
- 64. Explain the terms -selling short and Margin Trading
- 65. What are Circuit filters & trading bands
- 66. What is Insider Trading?
- 67. What are advances and declines?
- 68. How much equity should I have? OR What should your asset allocation be?
- 69. What are the good parameters while selecting a good blue-chip company stock?
- 70. How to analyse whether a new IPO will succeed or not while going forward?
- 71. How to calculate gains on sale of equity funds?
- 72. What does ownership of a company give you?
- 73. How to obtain Annual Report / Quarterly report?
- 74. What are Company Earnings and its importance for an investor?
- 75. What is Financial Planning?
- 76. How do you budget? Is it necessary to have a budget?
- 77. How much emergency fund should I hold?
- 78. How much money should I save towards retirement?
- 79. How to fix timelines for your goals and align them with the proper investment vehicles?
- 80. How many years will it take to double your investment?
- 81. What should you choose - Fixed Deposit OR investment in Stocks?
- 82. Are debt funds better than fixed deposits?
- 83. Should I rent or buy a house?
- 84. Can I afford to buy a house?
- 85. What are the major points to consider while taking a housing loan?
- 86. How many mutual funds should an investor have?
- 87. What should be your ideal mutual fund portfolio?
- 88. What is the difference between dividend and growth options while selecting a mutual fund?
- 89. Which is the best mode to select in mutual funds - monthly, half-yearly or annually?
- 90. How to choose the best investment instrument for your goals?
- 91. What are the charges that I should keep in mind while investing in mutual funds?
- 92. How does the taxation on redemption of SIPs work?
- 93. How are your dividends taxed across shares and mutual funds?
- 94. What are the must know things about family finance?
- 95. What is a Nominee and why is it important to have a nominee?
- 96. What happens to your policy if you discontinue your premiums?
- 97. Explain what is Deposit Insurance?
- 98. Family floater health plan or individual policy – which is a better option?
- 99. How much life insurance should I have?
- 100. Importance of life insurance
- 101. What is health insurance?
How to calculate gains on sale of equity funds?
In this module, you will learn how to compute the gains from selling stocks. But moving forward, let’s remember the simple process of calculating the profits of the business which we have studied in class V.
Profit = Selling price – Cost Price
Right?
In the equity market, the approach is the same, but the profit is commonly referred to as capital gains. So, first understand the meaning of capital gains.
What is Capital Gain?
A capital gain is an increase in the value of an asset compared to its purchase price. In simple terms, a capital gain occurs when a share is sold at a higher price and profits are earned.
Generally, it is divided into two categories depending on the time for which the shares are held by investors.
Types of Capital Gain
Long-term Capital Gain (LTCG): Equity long term capital gain refers to the profit earned on the sale of shares held for more than one year. However, this 12 month period is valid for only listed equity shares. For unlisted shares, if the investors extend the holding period for the sale of long-term equity shares to 24 months or more, it will be considered a long-term capital gain.
Short-term Capital Gain (STCG): It refers to the profit earned on the sale of shares held for less than one year. This is valid for listed shares and in case Unlisted Equity Shares are transferred within a period of 24 months from the date of its acquisition.
Computation of Capital Gain on Equity Shares
For calculating gains on the sale of equity funds, the following formula is applicable:
Capital Gains = Asset Value (at the time of sale) - Cost of Sale (STT, brokerage, etc.) - Cost of Acquisition of the fund
Here’s the image below which shows how to calculate the net profit. Let’s break down this in a simple manner.
Let's assume that intraday equity is Short-term Capital Gain (STCG), and delivery equity is Long-term Capital Gain (LTCG).
Particulars | Intraday Equity (STCG) | Delivery Equity (LTCG) | ||
Asset Value (at the time of sale) | 400*1100 | 440000 | 400*1100 | 440000 |
Less: Total Cost of Sale | ||||
Brokerage | 40 | 0 | ||
STT total | 110 | 840 | ||
Exchange txn charge | 27.89 | 27.89 | ||
DP charge | 0 | 15.93 | ||
GST | 12.37 | 5.17 | ||
SEBI charges | 0.84 | 0.84 | ||
Stamp duty | 12 | 203.1 | 60 | 949.83 |
Less: Cost of Acquisition of the fund | 400*1000 | 400000 | 400*1000 | 400000 |
Capital Gain | 39796.9 | 39050. |
The methods for calculating the short term & long term capital gain on equity are the same. However, the tax implications of these gains are different.
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