Budget 2019: What is Capital Asset?

Nirmala Sitharaman, India’s first full-time female Finance Minister, will present the first budget of Narendra Modi-led government's second term on July 5.

Taking up the crucial Finance Ministry portfolio, Sitharaman has a big task at hand. In her new role, the former defence minister needs to address issues such as economic slowdown, unemployment rate which is at a 45-year high, severe agrarian crisis, NPAs marring the banking sector.

While all eyes will be on Budget 2019, it is imperative for people to know the key terms associated with the annual exercise.

Here’s a lowdown on some of the important terms to help understand the Budget.

Capital Asset:

Capital Asset is a property that is expected to generate value for a period of time. Land, building, house, vehicles, machineries, jewellery, bonds etc. all come under capital assets.

Capital Assets are of two types:
1. Short-term capital asset: Asset held for a period of 36 months or less is known as a short-term capital asset. In the case of immovable property like house, land, building etc., the time period is 24 months.
2. Long term capital asset: Asset held for more than 36 months is called a long term asset. Some of these assets are Equity or preference shares, bonds, equity-oriented mutual funds etc.
Long term capital gain tax: Tax paid on profit generated out of Long term capital asset is called as Long term capital gains tax.

Also Read: What are Treasure Bills?