Taxation is the part of every country. Different country has its own policy and norm for collecting tax. Every Government collect tax for their country to explore and reach high standard of living. Indian Taxation mainly has Five head of tax. (1) Inome from House Property (2) Income From Salary (3) Income From Business and Profession (4) Income From Capital Gain (5) Income from other Sources. The main and important part among five head is Capital Gain. Most people think that capital is ruppee invested in the stock market or in a new business. But there is much more detailed meaning of capital and how to tax on it. Capital is not noly physical investment--the plant, the factory, the forklifts, the computers, the fax machines but also the other nonlabor factors of production that make a business operate efficiently.Capital can also refer to technological improvements or even the spark of an idea that leads to the creation of a new business or product. Ten years ago when Bill Gates decided to form a computer software company and then brought MS-DOS to market, he was creating capital. An investor who had the foresight to take the risk of investing in Bill Gates''s idea made fabulous amounts of money. That may seem like a huge windfall for the original financers of Microsoft, but without those investors'' risking their money, a globally dominant American firm that employs 15,000 U.S. workers might not exist today. Of course, for every Microsoft whose stockholders make large profits, there are hundreds of risky investments that lose money for investors. Capital asset means property of any kind except the following :
a) Stock-in-trade, consumable stores or raw-materials held for the purpose of business or profession.
b) Personal effects like wearing apparel, furniture, motor vehicles etc., held for personal use of the tax payer or any member of his family. However, jewellery, even if it is for personal use, is a capital asset.
c) Agricultural land in India other than the following:
Land situated in any area within the jurisdiction of muni-cipality, municipal corporation, notified area committee, town area committee, town committee, or a cantonment board which has a population of not less than 10,000 according to the figures published before the first day of the previous year based on the last preceding census.
Land situated in any area around the above referred bodies upto a distance of 8 kilometers from the local limits of such bodies as notified by the Central Government (Please see Annexure ''A'' for the notification). d) 6 1/2 per cent Gold Bonds, 1977, 7 per cent Gold Bonds, 1980, National Defence Gold Bonds, 1980 and Special Bearer Bonds, 1991 issued by the Central Government.
e) Gold deposit bonds issued under the Gold Deposit Scheme 1999 notified by the Central Government.