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

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

Original share's cost proportionately divided

FMV on date of allotment

FMV as on 1.4.2001

Nil

Handing over possession of immovable property in consideration of part-performance of a contract is:

A transfer

A gift and not a transfer

Not a transfer

A transfer only when conveyance deed is registered

Which of the following is NOT considered a capital asset?

Gold ornaments inherited from ancestors

Rural agricultural land in India inherited from his father

A commercial property held for earning rental income

Paintings kept as a personal collection

When a capital asset is converted to stock-in-trade capital gains are taxable in:

The year of acquisition of the original asset

The year of conversion

The year the FMV is determined

The year in which the stock-in-trade is sold or transferred

Gains from redemption of units of an equity-oriented mutual fund held for more than 12 months are treated as:

Short-term capital gains

Business income

Exempt income

Long-term capital gains

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

12 months

48 months

24 months

36 months

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

Permanently exempt

Taxed as LTCG in the year of original transfer

Taxed as income from other sources

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

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

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

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

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

Capital gains arise on depreciable assets when:

The asset is transferred to a subsidiary company

The sale consideration exceeds the written down value of the block

Any asset in the block is sold at any price

The asset is held for more than 36 months

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

Only resident individuals

Any assessee

Only companies

Individuals and HUFs only

A person owns a car for personal use, which statement is true ?

Its a Capital Asset if its a Luxury Car

Its not a Capital Asset Since its value Exceeds 5 lakhs

Its a Capital Asset since its a Property of any kind

Its a Capital Asset if its insured

When is transfer of an immovable property considered to have taken effect for capital gains purposes?

On the date possession is handed over or the conveyance deed is registered, whichever is earlier

On the date the buyer applies for mutation of records

On the date the full sale consideration is received

On the date the sale agreement is signed

Cost of acquisition of self-generated goodwill of a business is:

Fair market value at time of generation

Cost of brand building expenses

As certified by a chartered accountant

Nil

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

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

20% tax with indexation only

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 the assessee files a claim

The year in which compensation is received

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

The original cost of asset

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

Rs. 1 crore

Rs. 25 lakh

Rs. 50 lakh

No limit

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

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

Stamp duty value is used as full value of consideration

Actual sale consideration is accepted as the full value

Urban agricultural land within specified municipal limits is:

A capital asset liable to capital gains tax

Excluded from capital asset definition

Not subject to any tax

Treated as agricultural income and exempt