Under which of the following circumstances may ‘capital gains arise?
- When there is an increase in the sales of a product
- When there is a natural increase in the value of the property owned
- When you purchase a painting and there is a growth in its value due to increase in its popularity
Select the correct answer using the codes given below:
[UPSC Civil Services Exam – 2012 Prelims]
(a) 1 only
(b) 2 and 3 only
(c) 2 only
(d) 1, 2 and 3
- Any profit or gain that arises from the sale of a ‘capital asset’ is a capital gain.
- Capital gains tax is a tax imposed on gains derived from the disposition of capital assets.
- This gain or profit is charged to tax in the year in which the transfer of the capital asset takes place.
- ‘Capital Gains’ arise when,
- When there is a natural increase in the value of the property.
- When you purchase a painting and there is a growth in its value due to an increase in its popularity.
- Hence statement 2 and 3 are correct.