Q2.Explain the categories in Capital assets. Mr. C acquired a plot of land on 15th June, 1993 for 10,00,000 and sold it on 5th January, 2010 for 41,00,000. The expenses of transfer were 1,00,000.Mr. C made the following investments on 4th February, 2010 from the proceeds of the plot. a) Bonds of Rural Electrification Corporation redeemable after a period of three years, 12,00,000. b) Deposits under Capital Gain Scheme for purchase of a residential house 8,00,000 (he does not own any house).Compute the capital gain chargeable to tax for the AY2010-11. (Explanation of categories of capital assets 4 marks ; Calculation of indexed cost of acquisition 2 marks; Calculation of long term capital gain 2 marks; calculation of taxable long term capital gain 2 marks) 10marks
Answer : Categories of capital assets :
1. Collectibles : Long-term investments in collectibles are taxed at a flat 28%. Short-term investments in collectibles are taxed as short-term capital gains at your ordinary income tax rates. Collectibles include the following items:
- stamps,
- coins,
- precious metals,
- precious gems,
- rare rugs,
- antiques,
- alcoholic beverages, and
- fine art.
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