Question

Under the act,_____ gains tax is______ on both long term and short term gains.

• A. lottery... charged
• B. property.... calculated
• C. bonus..... deducted
• D. capital.... levied

Answer 1

The Correct Option is D

To solve this question, we need to fill in the blanks in the sentence using the given options. The sentence structure under focus is: "Under the act, _____ gains tax is ______ on both long term and short term gains."

Let's examine the options:

1. lottery... charged: Lottery gains tax is not typically used in reference to long-term or short-term gains. Hence, this option can be eliminated.
2. property... calculated: Property gains are computed for taxation, but the terminology usually revolves around 'capital gains' in this context, so this option is less likely.
3. bonus... deducted: Bonuses are subject to income tax, not a concept of gains tax in this context. Thus, this option is not suitable.
4. capital... levied: Capital gains refer to the profits from the sale of assets or investments. Taxes on these gains can apply to both long-term and short-term gains. "Levied" is the correct verb that describes imposing a tax. This option fits perfectly in the sentence.

Correct Answer: "capital... levied"

Explanation: Capital gains tax is a tax on the profit realized on the sale of a non-inventory asset. Long-term capital gains and short-term capital gains are both subject to capital gains tax. In India, the tax is levied under sections such as Section 10(38) and 111A of the Income Tax Act. The word "levied" refers to the imposition or assessment of tax, which is appropriate language for tax-related contexts.