MCQ on Capital Gains
Capital Gains MCQ with answers
Income Tax MCQs Multiple Choice Questions with Answers (2022 – 23)
In this
page you get MCQ on Capital Gains with answers which are asked
in various exams of Mumbai University, Dibrugarh University, Gauhati University,
Kolkata University and Assam University.
Also,
these questions are useful for B. Com exams of various universities covered
under CBCS pattern.
Also, these MCQ on Capital Gains objective type questions and answers are also useful for NTA Net Commerce Exam, CMA, CA, CS and other competitive exams.
Intoduction to Capital Gains
Capital Gain: Capital gain is the gain which arises from the transfer of a capital asset. Any profit or gain, which arises during a previous year, is chargeable under the head "capital gains" under Section 45. For a gain to be charged under the head "capital gain," it should arise due to a transfer of a capital asset. Such a profit or gain should not be exempt from tax under sections 54, 54B, 54D, 54EC, 54ED, 54FD, and 54G of Income Tax Act.
TYPE OF CAPITAL GAINS
a) Long term capital gains: When a capital asset is transferred by an assessee after having held it for 36 months/24months/12 months, as the case may be, the capital gains arising from this transfer is known as Long Term Capital Gains.
b) Short term capital gain: If the period of holding of capital asset before transfer is less than 36 months/24months/12 months, as the case may be, the capital gains arising from such transfer are known as Short Term Capital Gains.
1. The charging section of the income under the
head capital gains is:
a) Section 15
b) Section 17
c) Section 10
d) Section 45 (1)
Ans: d) Section 45 (1)
2. What are the conditions to be fulfilled for
charging of income under the head capital gains:
a) There must be a capital
asset.
b) There must be a transfer
of such capital asset.
c) The transfer of such
capital asset has been affected during the previous year.
d) All of the above.
Ans: d) All of the above.
3. Tick the assets which are included and excluded
from capital assets:
|
Assets included in Capital Assets |
Assets Excluded from Capital Assets |
|
Land and Building (Both Commercial
and Residential) Plant and Machinery Jewellery Drawings, Paintings, Collections Investments in securities Patent rights Intangible assets |
Stock in trade Personal Effects including wearing
apparel Jewellery or any property held as
stock-in-trade Agricultural rural land Special bearer bond Gold deposit bonds Deposit under gold monetization
scheme |
4. Capital gain is the gain which arises from
the transfer of
a) Land and Building Only
b) Shares of a Blue
Chip Company
c) Capital asset
d) All of the above
Ans: c) Capital asset
5. Which of the following is not regarded as
transfer of capital asset?
a) Sale or exchange of
an asset.
b) Conversion of
assets into stock-in-trade.
c) Redemption of zero
coupon bonds.
d) Any transfer of a
capital asset under a gift or will or an irrevocable trust
Ans: d) Any transfer of a capital asset under a gift or will or an
irrevocable trust
6. Which of the following is regarded as transfer
of capital asset?
a) Any transfer in a scheme
of amalgamation if the amalgamated company is an Indian company.
b) Any transfer in a scheme
of amalgamation of shares held in an Indian company by the
amalgamating foreign company to the amalgamated foreign company.
c) Any transfer, in a
demerger, of a capital asset by the demerged company to the resulting company.
d) Distribution of
assets on the dissolution of a firm, body of individuals or association of
persons
Ans: d) Distribution of assets on the dissolution of a firm, body
of individuals or association of persons
7. Which of the following assets shall
be treated as short term capital assets if these assets are held for not more
than 12 months?
a) A security and shares of
companies listed in a recognised stock exchange
b) A unit of an equity
oriented fund
c) A zero coupon bonds
d) All of the above
Ans: d) All of the above
8. Which of the following assets shall
be treated as short term capital assets if these assets are held for not more
than 24 months?
a) Unlisted shares of
companies
b) An immovable property
being land and building
c) All of the above
Ans: c) All of the above
9. All capital assets are treated as
short term capital assets if these assets are hold for not more than 36 months
except:
a) Unlisted securities
b) Immovable property
c) Securities listed in
stock exchange
d) All of the above
Ans: d) All of the above
10. Which of the following expenses are disallowed
while calculating Capital Gains?
a) Cost of acquisition of
asset.
b) Cost of improvement of
asset.
c) Expenses on transfer of
asset.
d) Securities transaction
tax.
Ans: d) Securities transaction tax.
11. Cost of acquisition of intangible assets which
is not purchased is:
a) FMV
b) Cost of the previous
owner
c) Nil
d) None of the above
Ans: c) Nil
12. Short term capital gain arises from the
transfer of an asset which is held by the assessee for not more than:
a) 12 Months in case of
shares.
b) 12 Months in case of
zero coupon bonds and any other listed securities.
c) 36 Months in case of
capital assets mentioned in a and b above.
d) All of the above
Ans: d) All of the above
13. In case of bonus shares, cost of acquisition
will be:
a) FMV
b) Cost of the previous
owner
c) Nil
d) none of the above
Ans: c) Nil
14. If unlisted securities are sold after 12
months, the capital gain arising from such sale is a:
a) STCG
b) LTCG
c) Income from other
sources
d) All of the above
Ans: a) STCG
15.
Short term capital gain on sale of unlisted shares are:
a) Taxable.
b) Exempted.
c) Partially Exempted.
d) Partially Taxable.
Ans:
a) Taxable.
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16.
Long term capital gain on sale of unlisted shares are:
a) Taxable.
b) Exempted.
c) Partially Exempted.
d) Partially Taxable.
Ans:
a) Taxable.
17. Indexation of cost is not necessary in which of
the following cases?
a) Transfer of securities
of Indian Companies by an NRI.
b) Transfer of units purchased
in foreign currency.
c) GDR or bonds purchased
in foreign currency by an NRI or resident individual.
d) All of the above
Ans:
d) All of the above
18. In case of right shares, cost of acquisition
will be:
a) FMV
b) Cost of the previous
owner
c) Cost to purchase the
right to own the share
d) Nil
Ans:
c) Cost to purchase the right to own the share
19. Exemption under section 54 and 54B is available
to:
a) Individual
b) HUF
c) Both Individual and HUF
d) All assessee
Ans:
c) Both Individual and HUF
20. For claiming exemption u/s 54B, the assets
transferred should be:
a) Rural agricultural land
b) Urban agricultural land
c) Any Land
d) Any Agricultural land
Ans:
b) Urban agricultural land
21. For claiming exemption under section 54B, the
new agricultural land should be purchased within:
a) 3 years from the date of
transfer.
b) 2 years from the date of
transfer.
c) 5 years from the date of
transfer.
d) 2 years from the end of
the relevant previous year.
Ans:
b) 2 years from the date of transfer.
22. Exemption under section 54D is available if
there is:
a) A transfer of any
capital asset
b) Compulsory acquisition
c) Slump sale
d) All of the above
Ans:
b) Compulsory acquisition
23. The cost inflation index number of the Previous
Year 2022-23 is:
a) 275
b) 280
c) 301
d) 331
Ans:
d) 331
24. Exemption u/s 54 on sale of residential house
property is allowed for investment in:
a) Land
b) Shares
c) Jewellery
d) A residential house
property
Ans:
d) A residential house property
25. New assets acquired for claiming exemption u/s
54, 54B or 54D, if transferred within 3 years, will result in:
a) Short-term capital gain
b) long-term capital gain
c) ST or LTCG depending
upon original transfer
Ans:
a) Short-term capital gain
26.
A partnership firm sold a residential house. The firm will get exemption under
section _______ on capital gains.
a) Sec. 54D.
b) Sec. 54E.
c) Sec. 54C.
d) Sec. 54EC.
Ans:
d) Sec. 54EC.
27. Conversion of capital asset into stock in trade
will result into capital gain of the previous year:
a) In which such conversion
took place
b) In which such converted
asset is sold or otherwise transferred
c) None of these two
Ans:
b) In which such converted asset is sold or otherwise transferred
28. Which one of the following statement is true?
a) Agricultural land in
rural area is a capital asset.
b) Capital gain arises from
transfer of any asset.
c) Capital assets include
both tangible and intangible assets as per sec 2(14).
d) Gold bonds under gold
deposit scheme are capital asset.
Ans:
c) Capital assets include both tangible and intangible assets as per sec 2(14).
29. Which one of the following statement is true?
a) Indexation of cost is
not beneficial provision for the assessee.
b) Cost of acquisition for
self-generated assets is market value.
c) Personal residential
house is a capital asset under income tax.
d) Any capital gain on
destruction of capital asset is exempt from tax.
Ans:
c) Personal residential house is a capital asset under income tax.
30. Long term capital loss can be carried forward
for next:
a) 6 Years
b) 8 Years
c) Indefinite Years
d) Cannot be carried
forward
Ans:
b) 8 Years
31. Tax on LTCG is:
a) 10%
b) 15%
c) 20%
d) 25%
Ans:
c) 20%
32. Tax on LTCG on sale of shares covered under
section 112A when exceeding Rs. 1, 00,000:
a) 10%
b) 15%
c) 20%
d) 25%
Ans:
a) 10% plus education cess and applicable surcharge
33. Tax on STCG on sale of listed shares covered
under STT is:
a) 10%
b) 15%
c) 20%
d) 25%
Ans:
b) 15%
34.
If STT is paid, then STCG tax on the transfer of capital asset is:
a) 10%.
b) 15%.
c) 20%.
d) 25%.
Ans:
b) 15%.
35.
If STT is paid, then LTCG tax on the transfer of listed equity shares is:
a) 15%.
b) 5%.
c) 10%.
d) Nil.
Ans:
d) Nil.
36. Income from transfer of self-generated goodwill
of a profession:
a) Is not chargeable to tax
under the head 'capital gains
b) Is chargeable to tax
under the head 'capital gains' as short term capital gains
c) Is chargeable to tax
under the head 'capital gains' as long term capital gains
d) Both (b) and (c)
Ans:
a) Is not chargeable to tax under the head 'capital gains
37. If the bonus shares are acquired before
1-4-2001, the cost of acquisition of such shares shall be:
a) Nil
b) Market value of such bonus
share on the date of allotment
c) Market value as on
1-4-2001
d) None of the above
Ans:
c) Market value as on 1-4-2001
38. If the bonus shares are acquired on or after
1-4-2001, the cost of acquisition of such shares shall be:
a) Nil
b) Market value of such
bonus share on the date of allotment
c) Market value as on
1-4-2001
d) None of the above
Ans:
a) Nil
39.
What is the date on which Fair Market Value of capital assets acquired is
determined?
a) 1.4.2001.
b) 1.4.1971.
c) 1.4.1981.
d) 1.4.1971.
Ans:
a) 1.4.2001.
Also Read: Income Tax Chapterwise MCQs (2022 - 2023)
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4. 50 Income from House Property MCQ, Income Tax MCQs 2022 - 23 [Free PDF]
6. 50 MCQ on Capital Gains, Income Tax MCQs 2022 - 23 [Free PDF]
8. 25+ Income Tax Deductions MCQs (80C to 80 U), Income Tax MCQs 2022 – 23 [Free PDF]
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40.
FMV on 1.4.81 is applicable to assets:
a) Acquired prior to 1.4.2001.
b) Transferred prior to 1.4.81.
c) Acquired after 1.4.2001.
d) None of the above.
Ans:
a) Acquired prior to 1.4.2001.
41. In case of long-term capital gain, the amount
to be deducted from consideration price shall be:
a) Cost of acquisition
b) Indexed cost of
acquisition
c) Market value as on
1-4-2001
d) None of the above
Ans: b) Indexed cost of
acquisition
42. Meaning of net consideration
|
Event |
Net
Consideration |
|
1. Amount or asset received from
insurer |
Money received or value of asset as
on the date of receipt |
|
2. Conversion of asset into stock in
trade |
FMV on the date of conversion |
|
3. Transfer of asset by a person to |
Amount recorded in the books of FIRM,
AOP or BOI |
|
4. Transfer of asset by a company on
its liquidation to its shareholders |
Market value of the asset on the date
of distribution shall be reduced by the amount of deemed dividend |
43.
Which of the following is not a capital asset?
a) stock in trade.
b) Goodwill.
c) Agricultural land in Mumbai.
d) Jewellary.
Ans:
a) stock in trade.
44.
Indexation is applicable to:
a) Sale of short term capital assets.
b) Sale of long term debentures.
c) Sale of depreciable capital assets.
d) Sale of long term capital assets which
are not depreciable assets.
Ans:
d) Sale of long term capital assets which are not depreciable assets.
45. Long-term capital loss
can be carried forward for 8 (Eight) succeeding previous years to be set off only from long-term capital
gains.
46. An income under the
head ‘Capital Gains’ to a trade union is
taxable. True
47. Indexation of cost of
capital asset is a must for all types of capital assets in computing income
from capital
gains. False
48. Short-term capital loss
can be set off from short-term as well as out of long-term capital
gains. True
49. Mutual fund schemes pay
tax on capital gains at 15% STCG and
10% LTCG.
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