Multiple choice

Units of a mutual fund are short term capital assets, if

  1. they are held for not more then twelve months preceeding the date of transfer.

  2. they are held for less than twelve months preceeding the date of transfer.

  3. they are held for not more than three years preceeding the date of transfer.

  4. they are held for less than three years preceeding the date of transfer.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Under income tax laws, mutual fund units are classified as short-term capital assets if held for NOT MORE THAN 12 months preceding the date of transfer. Option A correctly states 'not more than twelve months' which includes exactly 12 months. Option B incorrectly says 'less than twelve months' which would exclude holdings of exactly 12 months. The distinction matters for the exact 12-month holding period.

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