Question

Consider the following statements with respect to Capital Gains Tax:

1. It is tax imposed on gains made by selling assets at increased valuation.
2. Long term and Short term for capital gains are not uniform and depend on asset class.

Select the correct statement/s from above.

• A. Both 1 and 2
• B. 1 only
• C. None of the above
• D. 2 only

Answer 1

The correct option is A Both 1 and 2

<!--td {border: 1px solid #ccc;}br {mso-data-placement:same-cell;}--> A capital gain is defined as an increase in the value of any capital asset, and it is also considered as realised only when an asset is sold for a higher valuation.

It is the profit that can be earned from selling an asset that has gone up in value – they include assets like stocks, real estate or bonds.Capital gains tax is a tax imposed on such gains derived from the disposition of these capital assets.

For different assets the government defines short term and long term period depending on the period of holding and disposition of assets on higher valuation and this is different for different asset classes and may not necessarily be uniform.e.g for securities 1 year is a differentiating factor while for land it is 2 years.