Capital gain income arises from the sale of capital assets such as property, stocks, or mutual funds. It is classified into two types: short-term capital gains (STCG) for assets held for a shorter duration and long-term capital gains (LTCG) for assets held longer. Tax rates for STCG and LTCG vary, with exemptions available under specific sections of the Income Tax Act, such as Section 54 for property reinvestment. Proper documentation and timely filing are essential to claim benefits and avoid penalties. Strategic investment planning can help optimize capital gain taxes effectively.