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Options
- A
In indexation, the impact of capital gains tax is reduced in case of both short-term and long-term capital gains
- B
In indexation, the mutual fund’s performance is benchmarked against a suitable index
-
In indexation, the cost of acquisition is adjusted upwards to reflect the impact of inflation
Correct answer
- D
None of the above
Why this is the answer
Indexation adjusts the cost of acquisition of an asset for inflation, reducing the capital gains tax liability by reducing the taxable gain. This is based on data from the Central Board of Direct Taxes.
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