Consider the following statements about the Capital Gains Tax in India and identify the correct one ........

Economic Affairs Tax System

Consider the following statements about the Capital Gains Tax in India and identify the correct one.

Capital Gains Tax is an indirect tax and forms around 10% of net tax revenue in India.

Capital Gains Tax is levied on capital assets held by investors whenever their market price rises.

Capital Gains Tax is levied on profits when a capital asset is sold at a price higher than its purchase price.

Profits/capital gains on transaction of Securities are not subject to Capital Gains Tax even when Security Transaction Tax is not being paid.

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Explanation:

Third option is correct.
Capital gains are the profit that the investor realizes when he sells the capital asset for a price higher than its purchase price. The transfer of capital asset must be made in the previous year. This is taxable under the head ‘Capital Gains’ and there must exist a capital asset, transfer of the capital asset and profit or gains arising from the transfer.
Capital Gains include any property held by the assesses except the following:
1) Stock in trade.
2) Consumable stores or raw materials held for the purpose of business or profession.
3) Personal effects that are movable except jewellery, archaeological collections, drawings, paintings, sculptures or any art work held for personal use.
4) Agricultural land. The land must not be located within 8kms from a municipality, Municipal Corporation, notified area committee, town committee or a cantonment board with a minimum population of 10,000.
5) 6.5 percent Gold Bonds, National Defence Gold Bonds and Special Bearer Bonds.
6) Gold Deposit bonds under Gold Deposit Scheme.