Consider the following pairs:1. Indexation Benefit - Adjusts the purchase price of an asset according to inflation.2. Long-Term Capital Gains Tax - Tax on gains from assets held for more than 12 months.3. Short-Term Capital Gains Tax - Tax on gains from assets held for less than 24 months.4. Capital Gains Tax - Tax on the sale of an asset calculated as the difference between the sale price and the purchase price.How many pairs given above are correctly matched?a)Only one pairb)Only two pairsc)Only three pairsd)All four pairsCorrect answer is option 'B'. Can you explain this answer?

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UPSC Exam > UPSC Questions > Consider the following pairs:1. Indexation B...

Consider the following pairs:

1. Indexation Benefit - Adjusts the purchase price of an asset according to inflation.

2. Long-Term Capital Gains Tax - Tax on gains from assets held for more than 12 months.

3. Short-Term Capital Gains Tax - Tax on gains from assets held for less than 24 months.

4. Capital Gains Tax - Tax on the sale of an asset calculated as the difference between the sale price and the purchase price.

How many pairs given above are correctly matched?

a)
Only one pair
b)
Only two pairs
c)
Only three pairs
d)
All four pairs

Correct answer is option 'B'. Can you explain this answer?

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Consider the following pairs:1. Indexation Benefit - Adjusts the purc...

1. Indexation Benefit - Adjusts the purchase price of an asset according to inflation. - Correct. Indexation benefits help in adjusting the purchase price of an asset according to the prevailing inflation rate, allowing taxpayers to calculate the capital gains more accurately.

2. Long-Term Capital Gains Tax - Tax on gains from assets held for more than 12 months. - Incorrect. Long-term capital gains tax applies to assets held for more than 12 months for listed securities. However, for other assets, the period is 24 months.

3. Short-Term Capital Gains Tax - Tax on gains from assets held for less than 24 months. - Incorrect. Short-term capital gains tax applies to gains from assets held for less than 12 months for listed securities and less than 24 months for other assets.

4. Capital Gains Tax - Tax on the sale of an asset calculated as the difference between the sale price and the purchase price. - Correct. Capital gains tax is indeed calculated as the difference between the sale price of the property and its purchase price.

Thus, pairs 1 and 4 are correctly matched.

Answer: Option B: Only two pairs

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Consider the following pairs:1. Indexation Benefit - Adjusts the purchase price of an asset according to inflation.2. Long-Term Capital Gains Tax - Tax on gains from assets held for more than 12 months.3. Short-Term Capital Gains Tax - Tax on gains from assets held for less than 24 months.4. Capital Gains Tax - Tax on the sale of an asset calculated as the difference between the sale price and the purchase price.How many pairs given above are correctly matched?a)Only one pairb)Only two pairsc)Only three pairsd)All four pairsCorrect answer is option 'B'. Can you explain this answer?

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