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CA Intermediate · Taxation · Capital Gains

Meera, a resident individual, sold a residential house in Pune on 10 August 2026 (tax year 2026-27) for Rs 90 lakh. She had inherited it in 2015 from her father, who bought it in 2008. Which statement correctly describes the nature of the gain?

The gain is long-term. For property received by inheritance, the holding period of the previous owner is added to the heir's own period. Since the father bought the house in 2008, it was held far longer than 24 months, so the gain is long-term capital gain.

  1. ALong-term capital gain, because the holding period of the previous owner is included for an inherited assetCorrect
  2. BShort-term capital gain, because Meera herself held it only from 2015
  3. CBusiness income, because the sale is of immovable property
  4. DNot a capital gain, because inherited property is not a capital asset

Explanation

Under the capital gains provisions, when an asset is acquired by inheritance, the period for which it was held by the previous owner is included in the holding period. The house was held from 2008, so it is well over 24 months and is a long-term capital asset. Treating it as short-term ignores this inclusion rule.

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