Question

44) The Cost Inflation Index is mainly used to compute:
A) Business income
B) Long term capital gain
C) Short term capital gain
D) Income from other sources​

Answer 1

Answer:

option c is the correct answer

Answer 2

The cost inflation index is mainly used to compute the long term capital gains.

• To accurately measure the long term capital gains from the direct transfer or selling of capital assets, a Cost Inflation Index is typically used.  
• Capital gains refer to the gain of all capital assets, including land and buildings, bonds and securities, trademarks, patents, derived from the sale or a transfer.
• It will help potential investors sufficiently reduce their capital gains from the selling of long-term capital assets with the practical help of the CII. If the capital gains decline, accordingly does the applicable income tax on the earnings.