Capital Gain

Welcome to Your Assessment Test

Topic: Capital Gain

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

Which of the following is NOT regarded as a transfer?

Gift of a capital asset (other than ESOP shares)

Compulsory acquisition by government

Conversion of capital asset to stock-in-trade

Sale of shares on a stock exchange

When a company distributes assets to shareholders on liquidation for the company:

It is NOT regarded as a transfer - no capital gains for the company

It is taxable as business income

It is exempt only if assets distributed are cash

It is a taxable transfer attracting capital gains

For compulsory acquisition by government capital gains are chargeable in:

The year in which compensation is received

The year of notification of acquisition

The year of actual possession by government

The year the assessee files a claim

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

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

The year the FMV is determined

The year of acquisition of the original asset

The year of conversion

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

Speculative income

Exempt income

Capital gains

Business income

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

Long-term capital gains

Short-term capital gains

Exempt income

Business income

If an assessee cannot invest capital gains before the due date of filing the return they can:

Simply defer tax payment

Invest in any bank fixed deposit

Deposit the unutilized amount in Capital Gains Account Scheme

Get an automatic extension from the government

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

Only resident assessees

Any assessee

Only HUFs and companies

Only individuals

Which personal effects ARE considered capital assets?

Wearing apparel

Furniture held for personal use

Motor car for personal use

Jewellery paintings sculptures and works of art

Capital gains are chargeable as income of:

The year in which the sale agreement was made

The year in which the asset was acquired

The year in which sale consideration was received

The year in which the transfer took place

A specified mutual fund for capital gains purposes is one where equity investment in domestic companies is:

More than 65% of total proceeds

More than 50% of total proceeds

Not more than 50% of total proceeds

Not more than 35% of total proceeds

Redemption of Sovereign Gold Bonds by an individual is:

A taxable transfer

Not regarded as a transfer

Treated as business income

Exempt under a capital gains exemption

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

The lower of actual cost or FMV as on 1.4.2001

Original purchase price only

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

Only FMV as on 1.4.2001

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

Taxed as LTCG in the year of original transfer

Permanently exempt

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

Long-term capital gains

Short-term capital gains

Non-speculative business income

Speculative business income

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

Date of transfer of bonus shares

Date original shares were purchased

1st April of the year of allotment

Date of allotment of bonus shares

Which of the following IS considered a transfer for capital gains purposes?

Conversion of a capital asset into stock-in-trade

Transfer of asset by holding company to its 100% Indian subsidiary

HUF partition distributing capital assets

Distribution of assets by company to shareholders on liquidation

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

Business income (non-speculative)

Capital gains

Speculative business income

Exempt income

For an equity-oriented mutual fund a minimum of what percentage of total proceeds must be invested in equity shares of domestic listed companies?

90%

80%

65%

50%

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

The Assessing Officer must refer to a Valuation Officer

FMV as on date of transfer is used

Stamp duty value is used as full value of consideration

Actual sale consideration is accepted as the full value

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