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

Rajesh bought a plot of land on 1st January 2022 and sold it on 1st February 2024. How will the capital gains be classified?

Short-term capital gains, as the land is held for less than 24 months

Short-term capital gains, as the land is held for less than 36 months

Long-term capital gains, as the land is held for more than 24 months

Long-term capital gains, as the land is held for more than 12 months

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

Any assessee including companies

Only Hindu Undivided Families

Only resident individuals

Individuals and HUFs only

When a capital asset is destroyed due to flood and the owner receives insurance money, the full value of consideration is taken as:

The written down value of the asset

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

The money received or fair market value of assets received from the insurer on the date of receipt

The original cost of asset

A person who regularly trades in Futures and Options (F&O) - the income from F&O is taxable as:

Capital gains

Exempt income

Business income (non-speculative)

Speculative business income

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

Parent holds at least 51% of shares

The asset transferred is stock-in-trade

The subsidiary is a foreign company

Parent or its nominee holds the whole of the shares

Deemed full value of consideration rules for land/building apply when:

The assessee transfers depreciable assets

The assessee sells rural agricultural land

The assessee transfers listed shares below market price

The stamp duty value exceeds 110% of actual consideration received

For compulsory acquisition by government capital gains are chargeable in:

The year of notification of acquisition

The year of actual possession by government

The year the assessee files a claim

The year in which compensation is received

For a capital asset acquired before 1.4.2001 the cost of acquisition is taken as:

Original purchase price only

The lower of actual cost or FMV as on 1.4.2001

Only FMV as on 1.4.2001

The higher of actual cost or FMV as on 1.4.2001 (at assessee's option)

Which of the following is NOT considered a capital asset?

Gold ornaments inherited from ancestors

A commercial property held for earning rental income

Paintings kept as a personal collection

Rural agricultural land in India inherited from his father

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?

12.5% tax without indexation only

Indexation is not permitted for any transfer after 23 July 2024

20% tax with indexation only

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

The maximum investment in specified bonds for claiming exemption on LTCG from land/building is:

Rs. 50 lakh

No limit

Rs. 25 lakh

Rs. 1 crore

Full value of consideration means:

The FMV of the asset on date of transfer

The consideration received or accruing as a result of transfer

The stamp duty value only

The amount actually received by the seller

For bonus shares allotted on or after 1.4.2001 the period of holding is reckoned from:

1st April of the year of allotment

Date original shares were purchased

Date of transfer of bonus shares

Date of allotment of bonus shares

An investor who buys shares and holds them for investment purposes - profit on sale is taxable as:

Business income

Capital gains

Exempt income

Speculative income

Capital gains are chargeable as income of:

The year in which the transfer took place

The year in which sale consideration was received

The year in which the asset was acquired

The year in which the sale agreement was made

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

Long-term capital gains

Exempt from capital gains tax

Short-term capital gains

Long or short-term depending on holding period

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

Any assessee

Only resident assessees

Only individuals

Only HUFs and companies

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

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

Taxed as income from other sources

Permanently exempt

Taxed as LTCG in the year of original transfer

Which of the following is NOT regarded as a transfer?

Gift of a capital asset (other than ESOP shares)

Sale of shares on a stock exchange

Conversion of capital asset to stock-in-trade

Compulsory acquisition by government

Capital gains arise on depreciable assets when:

The sale consideration exceeds the written down value of the block

The asset is held for more than 36 months

The asset is transferred to a subsidiary company

Any asset in the block is sold at any price