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CA Final · Direct Tax Laws & International Taxation · Capital Gains

A specified fund claims exemption under Schedule VI for capital gains on shares of an Indian company received in relocation from the original fund. Capital gains of Rs 12,00,000 qualify as 'A'. Aggregate daily AUM held by non-resident unit holders from acquisition to transfer is Rs 600 crore-days (B) and aggregate daily total AUM is Rs 800 crore-days (C). Form No. 178 was filed as required. What is the exempt income under Rule 285?

The exempt income is Rs 9,00,000. Where Form No. 178 is filed, Rule 285 gives exemption of A x B / C, that is Rs 12,00,000 multiplied by 600/800, reflecting the proportion of assets held by non-resident unit holders.

  1. ARs 9,00,000Correct
  2. BRs 12,00,000
  3. CRs 3,00,000
  4. DNil

Explanation

Rule 285(1)(a): exempt income = (A x B)/C = 12,00,000 x 600/800 = Rs 9,00,000. Nil applies only if Form No. 178 is not filed, which is not the case here. Rs 3,00,000 wrongly uses the resident share.

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