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

Karan holds a specified unit linked insurance policy under section 2(22)(c). In an earlier tax year he received ₹6,00,000 for the first time, when premiums paid till that date were ₹4,00,000. In the current tax year he receives a further ₹5,50,000 including bonus, none of it previously considered. Aggregate premiums paid during the term till this receipt are ₹7,00,000. Under Rule 49 of the Income-tax Rules, 2026, what are the capital gains for the current year?

The capital gain is ₹2,50,000. For a later receipt, Rule 49 deducts from the new amount (₹5,50,000) the total premiums paid (₹7,00,000) reduced by premiums already considered earlier (₹4,00,000), leaving ₹3,00,000 as the deduction.

  1. A₹1,50,000
  2. B₹2,50,000Correct
  3. C₹5,50,000
  4. DLoss of ₹1,50,000

Explanation

For a later receipt the gain is C – D. C is ₹5,50,000. D is the aggregate premium paid till the date of receipt (₹7,00,000), reduced by the premium already considered earlier (₹4,00,000), so D is ₹3,00,000. The gain is ₹2,50,000. Deducting the full ₹7,00,000 gives a loss of ₹1,50,000, which is wrong because premium already considered earlier must be removed.

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