Background: The aim of present study was to differentiate the portal hypertension and non-portal hypertension as well as malignant causes of ascites by serum ascites albumin gradient (SAAG) and serum ascites cholesterol gradient(SACG).Material and method: a total of 130 patients having ascites were included in the study. Serum and Ascitic albumin and cholesterol was measured. SAAG and SACG were calculated by subtracting ascitic values from the respective serum values. Results: There was significant difference in SAAG in portal hypertension cases of ascites as compared to non-portal hypertension cases of ascites. In malignant cases the SACG was found significantly lower than non-malignant cases. The efficacy of SAAG in the present study to classify portal hypertension and non-portal hypertension etiology was 98.4%. SACG was able to accurately differentiate the malignant and non-malignant cases in 99.2% of cases at cut off value of 53mg/dlConclusion: In view of the good diagnostic efficacy, easy availability and cost-effectiveness, serum ascitic albumin and cholesterol gradient is an excellent parameter for the diagnosis of portal hypertension and malignant ascites respectively.