Capital asset typically refers to anything the individual owns for personal or investment purposes. It includes all kinds of property, movable or immovable, tangible or intangible, fixed or circulating. The basic concept is about ownership and this ownership can be of physical assets or financial assets. Within financial assets they can be title papers or they can be claims. For example, when it comes to equities, only when a share enters you demat account does it become a capital asset? Otherwise, any intraday holdings and futures / options holdings will not qualify as a capital asset. This is crucial to understanding the concept of capital gains and losses.

Capital assets are further classified as financial assets and non-financial assets. Financial assets are intangible and represent the monetary value of an ownership title or a financial claim. Stocks (Shares), equity funds, debt funds, bonds, deep discount bonds are all examples of Financial Assets.

A non-financial asset is an asset with a tangible presence and physical value such as real estate, Gold ornaments, equipment, machinery etc.