Capital Gains Assesment

Welcome to Your Assessment Test

Topic: Capital Gains-Basic

This assessment has been designed to evaluate your understanding of the provisions relating to Capital Gains under the Income Tax Act, including computation of capital gains, classification of assets, exemptions, recent amendments, compliance requirements, and practical application of taxation knowledge for the Financial Year 2025–26 / Assessment Year 2026–27.

Please read each question carefully and select the most appropriate answer. The assessment aims to support continuous professional learning, accuracy in tax computations and compliance handling, and enhancement of overall subject competency.

We wish you all the best for your assessment.

Assessment Instructions

The assessment consists of 20 Multiple Choice Questions (MCQs).
Each question carries 1 mark.
Only one option is correct for each question.
There are no negative marks for incorrect answers.
Questions skipped or left unanswered will be considered as 0 marks.
Retakes are not permitted once the assessment has been submitted.
The total duration of the assessment is 15 minutes.
The timer will start automatically once you enter your Name and Email Address and click on “Start Test”.
Ensure you have a stable internet connection and complete the assessment within the allotted time.

Please attempt the assessment carefully and submit your responses before the timer ends.

Name

Capital gains on depreciable assets forming part of a block of assets are always treated as:

Short-term capital gains

Exempt from capital gains tax

Long or short-term depending on holding period

Long-term capital gains

When a capital asset is converted into stock-in-trade, the full value of consideration for computing capital gains is:

The fair market value of the asset on the date of conversion

The original cost of acquisition

The actual sale price when the stock is eventually sold

The stamp duty value of the asset

Mr. X, a resident individual, purchased a plot of land in 2015 and sold it in FY 2025–26. Which of the following options may be available to him for computing his tax liability?

20% tax with indexation only

Indexation is not permitted for any transfer after 23 July 2024

12.5% tax without indexation only

Either 12.5% without indexation or 20% with indexation, whichever results in lower tax liability

Exemption on transfer of urban agricultural land on reinvestment in new agricultural land is available to:

Any assessee

Individuals and HUFs only

Only companies

Only resident individuals

Which of the following transactions may give rise to capital gains taxation?

Transfer of a capital asset by way of sale

Holding of a capital asset without any change in ownership

Conversion of stock-in-trade into a capital asset

Purchase of a residential house

If the new asset is transferred before the lock-in period the earlier exempted capital gains will be:

Taxed as income from other sources

Reduced from the cost of the new asset for computing capital gains

Permanently exempt

Taxed as LTCG in the year of original transfer

If the stamp duty value does NOT exceed 110% of the actual sale consideration:

FMV as on date of transfer is used

The Assessing Officer must refer to a Valuation Officer

Actual sale consideration is accepted as the full value

Stamp duty value is used as full value of consideration

For compulsory acquisition by government capital gains are chargeable in:

The year of actual possession by government

The year of notification of acquisition

The year in which compensation is received

The year the assessee files a claim

Urban agricultural land within specified municipal limits is:

Not subject to any tax

Excluded from capital asset definition

Treated as agricultural income and exempt

A capital asset liable to capital gains tax

10.

Full value of consideration means:

The amount actually received by the seller

The consideration received or accruing as a result of transfer

The stamp duty value only

The FMV of the asset on date of transfer

1 out of 2

11.

Unlisted shares and immovable property become long-term capital assets if held for more than:

48 months

12 months

24 months

36 months

12.

Intra-day trading in shares (buying and selling on the same day without actual delivery) is treated as:

Speculative business income

Short-term capital gains

Non-speculative business income

Long-term capital gains

13.

For long-term capital assets the cost of acquisition is replaced by:

Original cost

Indexed cost of acquisition using Cost Inflation Index

Fair market value on date of transfer

Written down value

14.

Capital gains arise on depreciable assets when:

The asset is held for more than 36 months

The sale consideration exceeds the written down value of the block

The asset is transferred to a subsidiary company

Any asset in the block is sold at any price

15.

Transfer of a capital asset by a company to its wholly-owned Indian subsidiary is not a transfer if:

Parent or its nominee holds the whole of the shares

The asset transferred is stock-in-trade

Parent holds at least 51% of shares

The subsidiary is a foreign company

16.

Exemption on LTCG from transfer of a residential house on reinvestment in another residential house is available to:

Only Hindu Undivided Families

Any assessee including companies

Individuals and HUFs only

Only resident individuals

17.

Market linked debentures and units of a specified mutual fund are always treated as:

Short-term capital assets regardless of holding

Long-term capital assets regardless of holding

Long-term if held over 36 months

Long-term if held over 12 months

18.

Cost of acquisition of bonus shares allotted on or after 1.4.2001 is:

Nil

FMV as on 1.4.2001

FMV on date of allotment

Original share's cost proportionately divided

19.

Which of the following is NOT considered a capital asset?

Paintings kept as a personal collection

Gold ornaments inherited from ancestors

Rural agricultural land in India inherited from his father

A commercial property held for earning rental income

20.

Exemption on LTCG from land or building on investment in specified bonds within 6 months is available to:

Only HUFs and companies

Only individuals

Any assessee

Only resident assessees

2 out of 2