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Income from Capital Gain – Sections 45, 46 and 54 (Detailed Analysis with Case Laws) Under the Income-tax Act, 1961 , when a person sells or transfers any of his capital assets —such as land, buildings, shares, or jewellery—and earns a profit, that profit is called a Capital Gain . The tax on such gain is charged under the head “Income from Capital Gains.” Section 45 – Charging provision Section 45 is the main charging section. It states that any profit or gain arising from the transfer of a capital asset during the previous year shall be chargeable to income tax in the year in which the transfer takes place. In simple words, if you sell a property and make a profit, you must pay tax in that same year on the gain. A transfer includes sale, exchange, relinquishment of rights, compulsory acquisition by government, or even conversion of a capital asset into stock-in-trade. If the asset is held for more than 36 months (for immovable property, 24 months ), the gain is treated as a lon...