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

Meera holds a specified unit linked insurance policy. In an earlier tax year she received Rs 5,00,000 for the first time against aggregate premium of Rs 4,00,000 paid till then. In the current tax year she receives a further Rs 3,00,000 (including bonus), none of which was considered earlier. Aggregate premium paid till the date of this receipt is Rs 5,50,000. What are the capital gains for the current year under Rule 49?

The capital gains are Rs 1,50,000. For a later receipt, Rule 49 takes the new amount of Rs 3,00,000 less the aggregate premium of Rs 5,50,000 reduced by premium already considered earlier, Rs 4,00,000, which leaves Rs 1,50,000 of premium to deduct.

  1. ARs 1,50,000Correct
  2. BRs 3,00,000
  3. CRs 2,50,000
  4. DRs 1,00,000

Explanation

Sl. No. 2 applies: C - D. C = Rs 3,00,000. D = total premium Rs 5,50,000 reduced by premium already considered earlier (Rs 4,00,000) = Rs 1,50,000. Gain = Rs 3,00,000 - Rs 1,50,000 = Rs 1,50,000. Using the full premium of Rs 5,50,000 would wrongly give a deduction without the reduction and a loss of Rs 2,50,000.

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