Capital Gains Tax (CGT) is a tax levied on the profit made from the sale or transfer of assets such as stocks, bonds, real estate, or other investments. The tax is applied to the difference between the sale price and the original purchase price of the asset. Short-term capital gains (STCG) are taxed at higher rates and apply to assets held for a year or less. Long-term capital gains (LTCG) are taxed at lower rates and apply to assets held for over a year. The rates vary by country and asset type. The purpose of capital gains tax is to tax individuals and corporations on their investment income, contributing to government revenue. It encourages long-term investment and stability in markets.