Which income category generally arises from disposing of a capital asset for more than its relevant cost?
Correct answer: B. Capital gain
- A. Employment income
- B. Capital gain
- C. Dividend income
- D. Royalty income
Explanation
A capital gain generally arises when a capital asset is disposed of for an amount exceeding its relevant cost, subject to applicable adjustments. Salary, dividends and royalties arise from different sources of income.
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About Taxation
Taxation covers the principles used to assess and collect taxes from individuals, businesses and transactions, with emphasis on income tax and sales tax concepts in Pakistan. Questions involve taxable income, exemptions, deductions, tax liability, withholding, returns, assessment, tax avoidance versus evasion, and the distinction between direct and indirect taxes.
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