Capital Gains Flashcards
What is the definition of ‘Capital Gains’ as per the Income Tax Act, 1961?
Capital Gains refer to the profit earned from the sale of a capital asset.
True or False: Short-term capital gains are taxed at a higher rate than long-term capital gains.
True
Which section of the Income Tax Act, 1961 deals with the taxation of capital gains?
Section 45
Fill in the blank: Long-term capital gains arise from the sale of assets held for more than _____ months.
12
What is the tax rate for long-term capital gains on listed equity shares?
20% with indexation benefit
What does ‘indexation’ refer to in the context of capital gains?
Indexation adjusts the purchase price of an asset for inflation.
Which section provides exemptions for long-term capital gains arising from the sale of residential property?
Section 54
What is the maximum exemption limit under Section 54 for investment in a new residential property?
The entire capital gains amount if reinvested.
True or False: Capital gains from the sale of a house can be exempted if the sale proceeds are invested in bonds under Section 54EC.
True
What is the holding period for an asset to qualify as long-term under the Income Tax Act?
More than 24 months for most assets.
Fill in the blank: Short-term capital gains are taxed at _____ % for listed equity shares.
15
What is the purpose of Section 50C in the Income Tax Act?
To determine the value of capital gains based on stamp duty value for certain assets.
What is the treatment of capital gains on the sale of a capital asset held for less than 36 months?
It is treated as short-term capital gains.
Which section provides for the taxation of capital gains resulting from the transfer of capital assets?
Section 45
True or False: Losses from capital gains can be set off against other income.
False
What is the provision under Section 74 regarding capital loss?
Long-term capital loss can be set off against long-term capital gains only.
What is the significance of Section 112 in the context of capital gains?
It provides the tax rates applicable on long-term capital gains.
Fill in the blank: The tax rate for long-term capital gains exceeding Rs. 1 lakh is _____ %.
20
What is a capital asset as defined in the Income Tax Act, 1961?
Any property held by an assessee, excluding stock-in-trade, personal effects, and certain specified assets.
True or False: Capital gains are calculated based on the difference between the sale price and the purchase price.
True
What is the relevance of Section 54F?
It provides exemptions for long-term capital gains from the sale of any asset other than a residential house if invested in a residential property.
Which section deals with the taxation of capital gains from the sale of shares and securities?
Section 112A
Fill in the blank: The holding period for land and building to qualify as long-term is _____ months.
24
What is the consequence of not complying with the provisions of capital gains taxation?
The taxpayer may face penalties and interest on unpaid taxes.
