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Options
- A
Reduction of short and long term capital gains tax by using an index-based calculation
- B
Benchmarking the index fund against a suitable index like Sensex / Nifty
-
Adjusting the cost of acquisition upwards to reflect the impact of inflation
Correct answer
- D
Adjusting the cost of acquisition downward to reflect the impact of inflation
Why this is the answer
Indexation involves adjusting the cost of acquisition of an asset upwards based on inflation (measured using the cost inflation index), which reduces the capital gains tax payable on long-term capital gains.
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