300 interview-style questions with answers based on "Capital Gains

 Here are 300 interview-style questions with answers based on the shared ICAI PDF on "Capital Gains" under Income Tax Law:

 Capital Gains – 50 Questions & Answers

Q.No	Question	Answer
1	What is taxed under the head 'Capital Gains'?	Profits or gains arising from the transfer of a capital asset.
2	Under which section are capital gains chargeable?	Section 45 of the Income Tax Act, 1961.
3	What are the key components for charging capital gains tax?	Existence of a capital asset and its transfer.
4	Define 'Capital Asset' as per the Act.	Property of any kind held by an assessee, whether or not connected with business/profession.
5	What are examples of assets not considered as capital assets?	Stock-in-trade, personal effects, rural agricultural land, gold bonds, etc.
6	Is jewellery a capital asset?	Yes, jewellery is a capital asset even if held for personal use.
7	What is STCA (Short-Term Capital Asset)?	A capital asset held for not more than 36/24/12 months depending on the asset type.
8	What is LTCA (Long-Term Capital Asset)?	A capital asset held for more than the prescribed period (usually > 36/24/12 months).
9	What is the holding period for listed securities to be long-term?	More than 12 months.
10	What is the holding period for unlisted shares or land/building to be long-term?	More than 24 months.

Q.No	Question	Answer
11	What is the holding period for other capital assets to be long-term?	More than 36 months.
12	What is the meaning of 'transfer' in capital gains?	Includes sale, exchange, relinquishment, extinguishment of rights, compulsory acquisition, etc.
13	Is conversion of capital asset into stock-in-trade a transfer?	Yes, it is deemed a transfer under Section 2(47).
14	Is conversion of stock-in-trade into capital asset a transfer?	No, but the period of holding starts from the date of conversion.
15	What is the full value of consideration in capital gains?	The amount received or accruing due to the transfer of capital asset.
16	What expenses are allowed as deduction from full value of consideration?	Expenditure incurred wholly and exclusively in connection with the transfer.
17	What is 'indexed cost of acquisition'?	Cost of acquisition adjusted using Cost Inflation Index (CII).
18	Is indexation allowed for short-term capital gains?	No, indexation is only allowed for long-term capital gains (except in certain cases).
19	Is indexation allowed for listed equity shares under Section 112A?	No, indexation is not allowed for such gains.
20	What is the tax rate on STCG under Section 111A?	15% (for listed shares and equity-oriented mutual funds with STT paid).

Q.No	Question	Answer
21	What is the tax rate on LTCG under Section 112A?	10% on gains exceeding ₹1 lakh (no indexation).
22	What is the tax rate on LTCG under Section 112?	20% with indexation or 10% without indexation (whichever is beneficial).
23	Is agricultural land a capital asset?	Only urban agricultural land is a capital asset; rural agricultural land is not.
24	Is gift of a capital asset considered a transfer?	No, under Section 47(iii), it is not considered a transfer.
25	Is partition of HUF considered transfer?	No, not regarded as transfer under Section 47(i).
26	What is Section 50?	Applies to capital gains on sale of depreciable assets.
27	What is slump sale?	Transfer of an undertaking as a going concern for a lump sum consideration.
28	What is the tax treatment of capital gains from slump sale?	Taxed as capital gains under Section 50B.
29	What are zero coupon bonds?	Bonds with no interest; redemption treated as transfer under Section 2(47).
30	Are gains from reverse mortgage taxable?	No, not considered transfer (Section 47(xvi)) and amount received is exempt u/s 10(43).

Q.No	Question	Answer
31	What is the treatment of compensation received on compulsory acquisition?	Taxed in the year of receipt u/s 45(5).
32	Is enhanced compensation also taxable?	Yes, taxed in the year of receipt.
33	What is the cost of acquisition for bonus shares?	Nil, if allotted before April 1, 2001; FMV as on 1.4.2001 otherwise.
34	When is buy-back of shares by domestic company exempt for shareholders?	When company pays additional tax u/s 115QA, gains are exempt u/s 10(34A).
35	Are transfer of shares in amalgamation taxable?	No, if conditions under Section 47(vii) are satisfied.
36	Is conversion of debentures into shares a transfer?	No, exempt under Section 47(x).
37	What is the base year for indexation?	FY 2001-02, with CII = 100.
38	What is Section 50C?	Deems stamp duty value as sale consideration in case of immovable property.
39	Is cost of acquisition adjusted if interest is claimed u/s 24(b) or 80EEA?	No, such interest is not added to cost for capital gains computation.
40	What is the meaning of ‘equity-oriented fund’?	Mutual fund investing minimum 65% in equity shares of listed Indian companies.

Q.No	Question	Answer
41	Can loss from capital gains be carried forward?	Yes, STCL and LTCL can be carried forward for 8 years.
42	Is rebate u/s 87A allowed on LTCG taxable u/s 112A?	No, it is not allowed.
43	Can deduction under Chapter VI-A be claimed against LTCG u/s 112A?	No, such deductions are not allowed.
44	How is capital gain on distribution of assets by liquidated company taxed?	In hands of shareholders; FMV minus deemed dividend is capital gain.
45	What is the cost of improvement?	Capital expenditure incurred to make any improvement on the asset.
46	What is the period of holding for shares acquired via gift?	Includes holding period of previous owner (Section 49(1)).
47	Is transfer of assets on amalgamation a taxable event?	No, provided amalgamated company is an Indian company (Section 47(vi)).
48	Is capital gain taxable on ESOPs transferred as gift?	Yes, FMV on date of transfer deemed as full consideration.
49	What is the cost inflation index for FY 2023–24?	348.
50	How are gains from market linked debentures taxed?	Always treated as short-term capital gains under Section 50AA.

 Capital Gains – Q&A Set 2 (Q51–Q100)

Q.No	Question	Answer
51	What is Section 54?	Provides exemption on capital gains from sale of residential house if invested in another residential house.
52	What is Section 54EC?	Exemption on LTCG from land/building if invested in notified bonds like NHAI/REC within 6 months.
53	What is the maximum investment limit under Section 54EC?	₹50 lakhs in a financial year.
54	What is Section 54F?	Exemption on LTCG (not from residential house) if net sale consideration is invested in residential house.
55	What happens if new house under Section 54/54F is sold before 3 years?	Exemption claimed earlier is withdrawn.
56	What is the exemption under Section 54B?	For capital gains on transfer of agricultural land if new agricultural land is purchased.
57	What is slump sale?	Transfer of business undertaking for a lump sum without assigning individual values to assets/liabilities.
58	How is capital gain computed in slump sale?	Net consideration minus net worth of undertaking.
59	Is indexation allowed in slump sale?	No, indexation is not allowed while computing net worth.
60	Is capital gain applicable on depreciable assets?	Yes, entire gain is treated as STCG under Section 50.

Q.No	Question	Answer
61	What is Section 50AA?	Capital gains on market-linked debentures always taxed as STCG regardless of holding period.
62	What is Section 55?	Defines cost of acquisition and cost of improvement.
63	What is Section 55A?	Empowers AO to refer valuation to DVO if value claimed is at variance with FMV.
64	What is Section 45(1A)?	Capital gains on insurance compensation for damage/destruction of capital asset.
65	How is the consideration treated under Section 45(1A)?	FMV of asset or money received is treated as consideration.
66	Is possession under part performance of contract a transfer?	Yes, it is deemed transfer under Section 2(47)(v).
67	How is capital gain calculated in reverse mortgage?	Not applicable – not considered a transfer.
68	Is cost of acquisition for self-generated goodwill available?	No, it is considered nil.
69	What is 'net consideration'?	Sale consideration minus transfer expenses.
70	What is 'net worth' in slump sale?	Book value of assets minus liabilities of undertaking.

Q.No	Question	Answer
71	What is the difference between full value of consideration and sale price?	Full value is the value received or receivable; sale price is actual cash received.
72	Can capital loss be adjusted against salary income?	No, capital loss can only be set off against capital gains.
73	Can STCL be set off against LTCG?	Yes.
74	Can LTCL be set off against STCG?	No. LTCL can only be adjusted against LTCG.
75	What is the time limit for filing return to carry forward capital loss?	Return must be filed within due date under section 139(1).
76	Are shares held as stock-in-trade treated as capital asset?	No, they are excluded from capital assets.
77	What is Section 45(2)?	Capital gain on conversion of capital asset into stock-in-trade is taxable in year of actual sale.
78	What happens if debentures are converted into shares?	Not a transfer (Section 47(x)); cost and holding period are carried forward.
79	Is bonus share taxable on receipt?	No, but taxable when sold.
80	What is the cost of acquisition of bonus shares?	Nil (if allotted after 1.4.2001); FMV as on 1.4.2001 if allotted earlier.

Q.No	Question	Answer
81	Are rights shares taxable?	No on allotment; taxable on transfer.
82	What is the cost of acquisition of rights shares?	Amount paid to the company to subscribe to such shares.
83	Is renunciation of rights taxable?	Yes, the consideration received is taxable as capital gains.
84	What is the period of holding for shares acquired in amalgamation?	Includes period for which shares in amalgamating company were held.
85	What is Section 112?	Governs taxation of LTCG for assets other than those covered under 112A.
86	What is the tax rate for unlisted shares held by non-resident?	10% without indexation.
87	What is the capital gain on buyback of shares by foreign company?	Taxable in hands of shareholder u/s 46A.
88	What is the tax treatment of sweat equity shares?	Cost is FMV on date of allotment (taxed as perquisite earlier); gain taxed on sale.
89	What is deemed consideration in case of ESOP gift?	FMV on date of gift is treated as consideration.
90	What is the treatment of forfeiture of advance money received for asset?	Deducted from cost of acquisition as per Section 51.

Q.No	Question	Answer
91	What is the indexation formula?	(CII of year of sale ÷ CII of acquisition year or 2001-02, whichever later) × cost.
92	Can cost of acquisition be higher of FMV as on 1.4.2001 or actual cost?	Yes, assessee has an option to choose FMV as on 1.4.2001.
93	What is the tax on sale of zero coupon bond after 1 year?	10% without indexation (LTCG).
94	Is exemption under Section 54F available if part of capital gain is invested?	Proportional exemption is allowed.
95	What happens if new house under Section 54 is not purchased within 2 years?	Exemption is withdrawn and taxed in year of non-compliance.
96	What is the period allowed for construction under Section 54?	Construction must be completed within 3 years from date of transfer.
97	Can reinvestment in house under Section 54 be made before sale of original asset?	Yes, purchase within 1 year before or 2 years after, or construction within 3 years.
98	Is gain from sale of urban agricultural land taxable?	Yes, it is treated as capital asset.
99	Is capital gain on inherited property taxable?	Yes, when the property is sold, gain is taxable in hands of inheritor.
100	What is the cost of acquisition of inherited property?	Cost to previous owner; indexed from year of acquisition by previous owner.

 Capital Gains – Q&A Set 3 (Q101–Q150)

Q.No	Question	Answer
101	What is the treatment of assets received in liquidation of a company?	Not taxable in company’s hands; in shareholder’s hands, FMV minus deemed dividend taxed as capital gains.
102	What is Section 46(2)?	Taxability of capital gains in hands of shareholders on liquidation of company.
103	What is Section 46(1)?	Distribution of assets on liquidation is not treated as transfer for company.
104	Are shares acquired on amalgamation taxable?	Not taxable if amalgamated company is Indian and shares are allotted.
105	Can shares received in demerger be taxed?	Not taxable if resulting company is Indian and conditions are satisfied.
106	Is transfer by holding to 100% subsidiary taxable?	No, if subsidiary is Indian company (Section 47(iv)).
107	Is transfer by 100% subsidiary to holding taxable?	No, if holding is an Indian company (Section 47(v)).
108	What is the treatment of sweat equity shares?	FMV on allotment is taxable as perquisite; gain on sale taxed as capital gains.
109	Is conversion of preference shares to equity shares a transfer?	No, not regarded as transfer under Section 47(xb).
110	What is cost of acquisition for converted equity shares?	Cost of original preference shares.

Q.No	Question	Answer
111	What is the holding period for converted equity shares?	Includes period of holding of preference shares.
112	What is the period of holding in case of amalgamation?	Includes period held in amalgamating company.
113	What is the cost of acquisition in case of gift?	Cost to previous owner.
114	What is the holding period in case of gifted asset?	Includes period held by previous owner.
115	Is capital gains applicable on ESOPs given free under trust?	Yes, FMV on date of gift is deemed full value of consideration.
116	What is capital gain on right entitlement renounced?	Entire proceeds are taxable as STCG or LTCG.
117	Is STT allowed as deduction in capital gain computation?	No, STT is not deductible.
118	What is cost inflation index (CII) for FY 2023–24?	348.
119	Is advance forfeited before 1.4.2014 deductible from COA?	Yes, it reduces cost of acquisition.
120	Is advance forfeited after 1.4.2014 deductible from COA?	No, it is taxable as income under "Other Sources".

Q.No	Question	Answer
121	Are ESOP shares held for > 12 months LTCG?	Yes, if listed equity shares and STT paid.
122	Is capital gain applicable on surrender of tenancy rights?	Yes, considered transfer under Section 2(47).
123	What is the tax treatment of compensation for eviction from property?	Taxable as capital gains if tenancy rights existed.
124	Are shares held in foreign company a capital asset?	Yes.
125	Are foreign securities considered capital assets?	Yes, unless held as stock-in-trade.
126	Are mutual fund units taxed similarly to shares?	Equity-oriented funds taxed like listed shares; others as per general capital gains.
127	What is indexed cost formula?	(CII of year of sale ÷ CII of acquisition year or 2001-02, whichever is later) × actual cost.
128	Can indexation apply to bonds and debentures?	No, except capital indexed bonds and sovereign gold bonds.
129	Are unlisted shares held for 30 months LTCG?	Yes, if held for more than 24 months.
130	Are mutual funds covered under Section 112A?	Only equity-oriented mutual funds.

Q.No	Question	Answer
131	What is full value of consideration in ESOP transfer to trust?	FMV on date of transfer.
132	What is FMV for unlisted shares if consideration not determinable?	As per Rule 11UA.
133	Is compensation received for surrender of lease a capital gain?	Yes.
134	Is goodwill self-generated taxable on transfer?	Yes, but cost of acquisition is considered nil.
135	Is goodwill purchased taxable on transfer?	Yes, with purchase cost as acquisition cost.
136	Is capital gain applicable on transfer of foreign currency?	No, foreign currency (personal effect) is excluded unless held as investment.
137	Can advance received and forfeited be set off against capital gain?	If before 1.4.2014, reduce COA; if after, taxable as income.
138	Can advance received be taxed twice?	No, once as income, then not again in CG.
139	Is personal car a capital asset?	No, it is personal effect.
140	Is art work a capital asset?	Yes, even if used personally.

Q.No	Question	Answer
141	Are gold ornaments capital assets?	Yes, even if used personally.
142	Is stamp duty value relevant for computing capital gain on land?	Yes, under Section 50C.
143	What is deemed consideration under Section 50C?	Higher of actual sale value or stamp duty value.
144	Can difference in stamp duty value and actual sale be ignored?	Yes, if difference ≤10%.
145	Can seller challenge stamp duty value?	Yes, AO can refer to DVO.
146	Is transfer of leasehold rights taxable?	Yes, considered transfer.
147	Is compensation for compulsory acquisition taxable?	Yes, in the year of receipt.
148	What is the cost of acquisition of self-generated brand?	Nil.
149	What is the cost of acquisition of self-generated trademark?	Nil.
150	Can capital loss be carried forward if return is late?	No, only if return is filed within due date under Section 139(1).

 Capital Gains – Q&A Set 4 (Q151–Q200)

Q.No	Question	Answer
151	Can long-term capital loss be set off against short-term capital gain?	No, it can only be set off against long-term capital gain.
152	Can capital loss be set off against income from house property?	No, capital losses can only be adjusted against capital gains.
153	What is Section 115AB?	Special provision for taxation of capital gains of offshore funds from specified assets.
154	What is Section 115AC?	Taxation of income from bonds or GDRs purchased in foreign currency.
155	What is Section 115AD?	Taxation of capital gains for Foreign Institutional Investors (FIIs).
156	What is the rate of tax for FIIs on STCG under Section 111A?	15%.
157	What is the tax rate for FIIs on LTCG under Section 112A?	10% on gains exceeding ₹1 lakh.
158	Is capital gains tax payable on switching mutual fund schemes?	Yes, considered transfer.
159	Is capital gain applicable on maturity of insurance policies?	Only if exempt u/s 10(10D) is not available.
160	Can multiple exemptions (e.g., Sec 54 + 54EC) be claimed on same gain?	Yes, if conditions of both sections are fulfilled and investment is made accordingly.

Q.No	Question	Answer
161	Are foreign citizens taxed on capital gains in India?	Yes, if asset is located in India or income is received in India.
162	Is TDS applicable on capital gains for NRI?	Yes, under Section 195.
163	What is the TDS rate for LTCG on property sold by NRI?	20% plus surcharge and cess.
164	Can NRI claim indexation on property held in India?	Yes, under Section 48.
165	Can advance tax be paid on capital gains?	Yes, though challenging due to unpredictability.
166	Is self-occupied house treated as capital asset?	Yes, but exempt under Section 54 if reinvested.
167	Is TDS applicable for buyer on purchase of property?	Yes, @1% under Section 194-IA if value exceeds ₹50 lakhs.
168	Is indexation allowed on inherited property?	Yes, from year of previous owner's acquisition or 2001-02.
169	What is cost of acquisition of inherited property acquired before 1.4.2001?	FMV as on 1.4.2001 or actual cost, whichever is higher.
170	What is capital gain if entire sale value is reinvested under Section 54?	Entire gain is exempt if full investment is made.

Q.No	Question	Answer
171	What happens if new house under Section 54 is sold within 3 years?	Exemption claimed earlier becomes taxable.
172	What is lock-in period for Section 54EC bonds?	5 years.
173	What is the consequence of selling 54EC bonds before 5 years?	Exemption is withdrawn and taxed in year of breach.
174	Are advance payments towards new house valid under Section 54?	Yes, if made within specified time limits.
175	Can exemption under Section 54 be claimed for more than one house?	Yes, but only one house is allowed unless value ≤ ₹2 crores (once in lifetime).
176	Can capital gains exemption be claimed without filing return?	No, return must be filed to claim exemption.
177	Is deposit in Capital Gains Account Scheme necessary?	Yes, if investment not made before return due date.
178	What is Section 54D?	Exemption on industrial land/building used for industrial purpose and compulsorily acquired.
179	What is Section 54G?	Exemption on shifting industrial undertaking from urban area to rural area.
180	What is Section 54GA?	Exemption for shifting industrial undertaking to Special Economic Zone (SEZ).

Q.No	Question	Answer
181	What is Section 112B?	(Note: This section is repealed.)
182	What is Section 45(5A)?	Capital gain for real estate joint development agreements is taxed in year of completion certificate.
183	What is Section 10(38)?	Earlier exemption for LTCG on listed equity shares (withdrawn from AY 2019-20).
184	What is grandfathering provision in Section 112A?	FMV as on 31.01.2018 is considered as COA for listed shares acquired before that date.
185	Is STT payment required for availing 112A benefit?	Yes, on both purchase and sale (for equity shares).
186	Can listed debentures get 112A benefit?	No, 112A applies to equity shares and equity-oriented funds only.
187	Can rural agricultural land be converted to capital asset?	No, rural agricultural land is not a capital asset.
188	Is urban agricultural land a capital asset?	Yes, subject to population and distance criteria.
189	What is the maximum exemption under Section 54F?	Full capital gain if entire net consideration is invested.
190	Can capital gains be exempt under Section 54 if property is purchased in spouse's name?	Yes, as held in case law if funds are contributed by assessee.

Q.No	Question	Answer
191	Can assessee invest in joint property and claim Section 54?	Yes, if ownership and investment conditions are satisfied.
192	Can Section 54EC bonds be pledged?	No, they are non-transferable and non-negotiable.
193	What is the treatment if new house under Section 54 is not constructed within 3 years?	Exemption is withdrawn and taxable in year of default.
194	Is reinvestment allowed in a foreign house under Section 54?	No, investment must be in India.
195	Can HUF claim exemption under Section 54?	Yes, HUF is eligible.
196	What is Section 50CA?	FMV of unlisted shares considered as full value if transfer price is lower.
197	What is Section 56(2)(x)?	Income from transfer for inadequate consideration (applies to buyer).
198	Can losses on depreciable assets be long-term?	No, all gains/losses from depreciable assets are short-term.
199	What is period of holding for flat in co-operative society?	From date of allotment of shares.
200	Is transfer under development agreement taxable?	Yes, taxed in the year of completion certificate under Section 45(5A).

 Capital Gains – Q&A Set 5 (Q201–Q250)

Q.No	Question	Answer
201	What is “full value of consideration” in case of development agreement u/s 45(5A)?	Stamp duty value of the assessee’s share in the project on the date of completion certificate.
202	Who is eligible for Section 45(5A)?	Individual or HUF entering into a registered development agreement.
203	Is indexation benefit available in Section 45(5A) computation?	Yes, if the gain is long-term.
204	What if the assessee transfers their share before the project is completed in 45(5A)?	Capital gain is taxed in year of such transfer, not on completion.
205	Can exemption under Section 54 be claimed for self-construction?	Yes, if construction is completed within 3 years.
206	Is construction of additional floor considered a new house for Section 54?	No, it is not treated as a separate new residential house.
207	Can cost of stamp duty and registration be included in COA?	Yes, if incurred at time of acquisition.
208	Can brokerage on sale be deducted while computing capital gains?	Yes, if incurred wholly and exclusively for transfer.
209	Can loan interest be part of cost of acquisition?	Only if not already claimed u/s 24(b), 80EE, or 80EEA.
210	What is treatment of asset received in family settlement?	Not considered transfer if genuine settlement.

Q.No	Question	Answer
211	Is distribution of capital asset by firm to partner on reconstitution taxable?	Yes, as per Section 45(4).
212	What is Section 9B?	It taxes the revaluation gains on distribution of capital assets/business assets when partner retires.
213	What is FMV treatment under Section 9B?	FMV is deemed consideration for transferred capital/business assets.
214	Is conversion of partnership into company taxable?	Not taxable if conditions under Section 47(xiii) are fulfilled.
215	Can conversion of company into LLP be tax-exempt?	Yes, under Section 47(xiiib), subject to specified conditions.
216	What is the time limit for reinvestment under Section 54EC?	Within 6 months from date of transfer.
217	Can more than ₹50 lakh be invested in Section 54EC bonds?	No, ₹50 lakh is the maximum per financial year.
218	Can Section 54EC and 54F be claimed together?	Yes, if conditions are satisfied and assets are different.
219	Are losses from listed shares treated as STCL or LTCL?	Depends on holding period (≤12 months = STCL; >12 months = LTCL).
220	What is cost of acquisition if STT is paid?	Purchase price + other acquisition costs (STT not included).

Q.No	Question	Answer
221	Can inherited gold be considered capital asset?	Yes, and capital gain arises on sale.
222	How is COA determined for inherited gold?	Cost to previous owner or FMV on 1.4.2001 if acquired before that.
223	What is Section 50B?	Special provisions for computing capital gains in case of slump sale.
224	What is net worth under slump sale?	Aggregate value of assets – liabilities, as per books.
225	Can goodwill be part of slump sale calculation?	Yes, if recorded in books of account.
226	Is indexation allowed in slump sale?	No, indexation is not allowed for net worth.
227	What is Section 115BBDA?	Tax on dividend income exceeding ₹10 lakh (now largely redundant after Budget 2020).
228	Can assessee use FMV on 01.04.2001 as COA for unlisted shares?	Yes, if acquired before that date.
229	Is capital gain applicable on redemption of mutual funds?	Yes, as it is considered a transfer.
230	Can STT paid on sale be claimed as deduction?	No, disallowed under Section 48.

Q.No	Question	Answer
231	What is treatment of forfeited shares?	Loss is allowed as capital loss in year of forfeiture.
232	Can loss on equity share be treated as business loss?	Only if shares were held as stock-in-trade.
233	Is capital gain applicable on conversion of physical gold into EGR?	No, exempt under Section 47(viid).
234	What is period of holding in EGR conversion?	Includes holding period of gold prior to conversion.
235	What is the tax implication on redemption of EGR?	Capital gains apply, based on holding period.
236	Are gains from cryptocurrency treated as capital gains?	Yes, unless specifically notified; otherwise taxed at flat 30% under Section 115BBH.
237	What is the period of holding for flat allotted by builder?	From date of allotment letter.
238	Is transfer by will a taxable transfer?	No, exempt under Section 47(iii).
239	What is the indexation benefit in case of ESOP shares?	Allowed if shares qualify as long-term capital asset.
240	Can loss from slump sale be carried forward?	Yes, as long-term capital loss.

Q.No	Question	Answer
241	Is conversion of gold bonds into cash at maturity taxable?	Yes, LTCG arises unless specifically exempted (like Sovereign Gold Bonds).
242	What is tax treatment of Sovereign Gold Bonds on redemption?	Exempt from capital gains tax if held till maturity.
243	What is Section 55(2)(a)?	Provides rules for COA in various self-generated assets.
244	Are securities held by FIIs treated as capital assets or stock-in-trade?	Always treated as capital assets.
245	Can REIT or InvIT units be eligible for 111A and 112A benefits?	Yes, if STT conditions are fulfilled.
246	Is agricultural land in rural area a capital asset?	No, it is specifically excluded.
247	What is capital gain on transfer of right to acquire property?	Taxable as capital gain (self-generated asset with nil cost if acquired for free).
248	Are leasehold improvements considered capital assets?	Yes, but rights depend on terms of agreement.
249	What is transfer price for unlisted shares if undervalued?	FMV deemed consideration u/s 50CA.
250	Can gift of shares to relative be taxable?	No capital gain to donor; but income may arise to donee under Section 56(2)(x).

 Capital Gains – Q&A Set 6 (Q251–Q300)

Q.No	Question	Answer
251	What is Section 10(37)?	Exemption of capital gains on compulsory acquisition of urban agricultural land by individuals/HUF.
252	Is exemption under Section 10(37) available to companies?	No, it is only for individual and HUF.
253	What are conditions for exemption under Section 10(37)?	Compensation received after 1-4-2004 for compulsory acquisition, and land used for agriculture 2 years prior.
254	Can loss on self-generated goodwill be claimed?	No, as cost of acquisition is nil.
255	Are ULIPs taxable under capital gains?	Yes, if aggregate premium exceeds ₹2.5 lakhs per annum (for policies issued on/after 1.2.2021).
256	What is Section 45(1B)?	Taxability of ULIPs not eligible for exemption under Section 10(10D).
257	Is assignment of keyman insurance policy taxable?	Yes, maturity proceeds after assignment are taxable as capital gains.
258	Can cost of acquisition be negative?	No, it is taken as nil if not determinable.
259	What is the character of gains from self-generated brand name?	Long-term or short-term depending on period held.
260	What is Section 55A?	Power of Assessing Officer to refer valuation to a Valuation Officer.

Q.No	Question	Answer
261	Can compensation received from eviction be treated as capital gain?	Yes, if tenancy rights existed.
262	What is Section 47(vi)?	Transfer of capital asset in amalgamation not regarded as transfer if amalgamated company is Indian.
263	Are gold ETFs treated as equity-oriented mutual funds?	No, they are not equity-oriented.
264	Can exemption u/s 54 be claimed for more than one transaction in the same year?	Yes, if same asset is reinvested accordingly.
265	Is capital gains applicable on sale of carbon credits?	Yes, taxable as capital gains if held as capital asset.
266	Are carbon credits eligible for indexation?	Yes, if held for more than the specified period.
267	What is Section 115TCA?	Tax on distributed income by business trust to unit holders (except for interest income).
268	What is the rate of tax for sovereign wealth funds on capital gains?	Exempt under Section 10(23FE), subject to conditions.
269	Is TDS applicable on payment to NRI for sale of property?	Yes, @20% plus surcharge and cess for LTCG.
270	Can TDS be reduced for NRI property sale?	Yes, by applying for lower deduction certificate under Section 197.

Q.No	Question	Answer
271	Is family settlement a transfer?	No, if genuine and bona fide among family members.
272	Is gift of agricultural land taxable as capital gain?	No, gift is not a transfer; but sale of urban agri land is taxable.
273	Is encashment of EGR (Electronic Gold Receipt) taxable?	Yes, capital gains apply.
274	What is Section 47(viid)?	Exempts conversion of gold to EGR or vice versa.
275	Is transfer of artwork to museum taxable?	No, exempt under Section 47(ix).
276	Can NRI claim exemption under Section 54?	Yes, for residential property in India.
277	Can residential house outside India qualify for Section 54?	No, house must be located in India.
278	What is cost of acquisition for ESOPs?	FMV on date of exercise (if taxed as perquisite earlier).
279	What is holding period for ESOP shares?	From date of allotment of shares.
280	Can Section 54 exemption be claimed if house is purchased in joint name?	Yes, if investment is made by assessee.

Q.No	Question	Answer
281	Is partial exemption allowed under Section 54F?	Yes, proportionate exemption is allowed.
282	Is registration mandatory for claiming Section 54?	No, but ownership must be established.
283	Can Section 54F be claimed for purchase of plot?	No, unless house is constructed on it within 3 years.
284	Can capital gains be invested in under-construction property?	Yes, construction must be completed within 3 years.
285	What happens if capital gain is not invested before return filing?	Must deposit in Capital Gain Account Scheme (CGAS).
286	What is the maximum time to utilize CGAS funds?	2 years for purchase and 3 years for construction.
287	What if CGAS funds remain unutilized after time limit?	Unutilized amount is taxable in the year when time limit expires.
288	What is the tax treatment of units of business trusts?	LTCG taxable @10% under Section 112A; STCG @15% under 111A.
289	What is Section 2(14)(a)?	Defines "capital asset" as property of any kind held by assessee.
290	Are winnings from lotteries capital gains?	No, they are taxed under “Income from Other Sources.”

Q.No	Question	Answer
291	Is capital gain taxed on conversion of preference shares to equity?	Not at time of conversion (exempt u/s 47(xb)); taxed at sale.
292	Are drawings and paintings personal effects?	No, they are excluded from personal effects and considered capital assets.
293	Is transfer of shares through will taxable?	No, exempt under Section 47(iii).
294	Can capital gains exemption be claimed for more than one house under 54F?	No, exemption not allowed if more than one house is owned (except new house).
295	Can Section 54EC bonds be transferred?	No, they are non-transferable and non-negotiable.
296	Is transfer of shares held in Demat form treated differently?	Period of holding counted from date of credit in Demat account.
297	Can long-term capital loss be set off against income from salary?	No, only against long-term capital gains.
298	Is there any tax on exchange of property?	Yes, considered transfer under Section 2(47).
299	Can partner claim capital gain exemption on assets received on retirement?	No, unless conditions for Section 47 are met (not normally allowed).
300	Is forfeited advance money taxable?	Yes, u/s 56(2)(ix) from A.Y. 2015-16; earlier it reduced COA.