Profits or gains arising from transfer of a capital asset are called ldquo Capital Gains rdquo and a...........

Economic Affairs Tax System

Profits or gains arising from transfer of a capital asset are called “Capital Gains” and are charged to tax under the head “Capital Gains Tax”. A gain in the price of which of the following would be considered as Capital gains?

Archaeological collections
Jewellery
A work of art
Stocks

Select the correct answer using the codes below.

1 and 2 only

4 only

2 and 4 only

1,2,3 and 4

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Explanation:

Capital asset is defined to include: Any kind of property held by an assesse, whether or not connected with business or profession of the assesse, stocks, movable property, jewellery; archaeological collections; drawings; paintings; sculptures; or any work of art.

For e.g. if you purchased a residential house in 2015 for Rs. 10,00,000 and sold it in 2016 for Rs. 20,00,000, a capital asset gain of Rs. 10,00,000 arising on account of sale of residential house will be charged to tax under the head “Capital Gains”.