Skip to content

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

A specified fund in Schedule VI relocated shares from an original fund. It sold those shares, earning qualifying capital gains (as in Rule 285(1)(a), item A) of Rs 12,00,000. From acquisition to transfer, the aggregate daily AUM held by eligible non-resident unit holders was Rs 600 crore-days and aggregate daily total AUM was Rs 800 crore-days. Form No. 178 was filed per sub-rule (2). Another fund with identical facts did not file Form No. 178. What are the exempt incomes of the two funds respectively?

The filing fund's exempt income is Rs 9,00,000 and the non-filing fund's is nil. Rule 285 gives exempt income as A times B divided by C, which is 12,00,000 multiplied by 600/800. Where Form No. 178 is not filed, exempt income is nil.

  1. ARs 9,00,000 and nilCorrect
  2. BRs 12,00,000 and nil
  3. CRs 9,00,000 and Rs 9,00,000
  4. DRs 3,00,000 and nil

Explanation

Exempt income = (A x B)/C = 12,00,000 x 600/800 = Rs 9,00,000 for the fund filing Form No. 178. Under Rule 285(1)(b), if Form No. 178 is not filed, exempt income is nil. Rs 3,00,000 is the taxable residue (12,00,000 - 9,00,000), not the exempt amount.

Did you get it right without looking?

One question tells you little. A timed set on Capital Gains shows your real accuracy, how long you take and where you lose marks.

Practise Capital GainsFree diagnostic mock

More Capital Gains questions