Q. With reference to Capital Gains Tax in India, consider the following statements:
1.‘Capital gains’ arise from the transfer of a capital asset, which includes both movable and immovable property.
2.‘Short-term capital assets’ are those held for more than 24 months in the case of immovable property.
3.‘Long-term capital gains’ on listed equity shares exceeding Rs. 1.25 lakh are taxed at 12.5% without indexation benefit.
4.Indexation adjustment is available for computing long-term capital gains on all types of assets, including shares.
Which of the statements given above is/are correct?
Answer: C
Notes:
Explanation:
Statement 1: Correct. Capital gains tax is levied on profits from the transfer (sale or exchange) of capital assets, encompassing property, shares, and other assets held as investments. Statement 2: Incorrect. For immovable property, the holding period for long-term classification is 24 months or more; thus, short-term is 24 months or less.
Statement 3: Correct. Effective from July 23, 2024, long-term capital gains on listed equity shares above Rs. 1.25 lakh are taxed at a flat 12.5% rate, without indexation.
Statement 4: Incorrect. Indexation is not available for listed equity shares or equity-oriented mutual funds; it applies to debt funds and property.
