NISM-Series-X-B: Investment Adviser (Level 2) · Case Studies in Comprehensive Financial Advice

Tax Planning in Case Studies for NISM X-B

Updated 11 October 2026 · Fact-checked

Tax planning in a case study means choosing investments and a tax regime that cut the client's tax without breaking suitability. Classify each income and gain, apply the correct rate, compare old and new regimes, then recommend products by goal, risk and liquidity first, and tax benefit second.

Understand Tax Planning in Case Studies

A tax planning case gives you a client profile: income, savings, investments, goals and risk appetite. Your job is to find the tax cost of the current position and suggest changes that lower it legally. The exam tests whether you can do this and still keep the advice suitable.

Start with the heads of income. Salary, interest and capital gains are taxed differently. Capital gains depend on the asset type and the holding period. Listed equity shares and equity-oriented mutual fund units are long term if held for more than 12 months. Short-term gains on them are taxed at a special rate, and long-term gains are taxed at a lower special rate above an annual exemption limit.

Next, the regime. The old regime allows deductions such as Section 80C, 80D and 80CCD(1B), but has higher slab rates. The new regime has lower slabs and a higher standard deduction, but allows very few deductions. Whether a client benefits from 80C investments depends on the regime they choose. If the new regime is cheaper, 80C investments give no tax saving, and you pick products on merit.

Finally, match products to the client. ELSS has a 3-year lock-in and equity risk. PPF is safe but has a long lock-in. NPS adds a further deduction but restricts withdrawals. Tax saving never overrides risk profile, time horizon or liquidity needs.

Rates and limits change with each Finance Act. In the exam, use the rates given in the question. If none are given, use the current rules in the NISM workbook.

Key formulas to remember

Long-term capital gains on listed equity and equity-oriented MFs: Tax = 12.5% × (LTCG − ₹1,25,000), plus 4% cess; Applies when STT is paid and the holding period is more than 12 months, for transfers on or after 23 July 2024. The ₹1,25,000 exemption is for the whole year, across all such gains. No indexation.
Short-term capital gains on listed equity and equity-oriented MFs: Tax = 20% × STCG, plus 4% cess; Holding period 12 months or less, STT paid, for transfers on or after 23 July 2024.
Debt mutual funds (units bought on or after 1 April 2023): Gain taxed at the client's slab rate; No long-term benefit, whatever the holding period. Check the fund's definition in the question.
Capital gain: Gain = Sale value − Cost of acquisition − Transfer expenses; Add indexation only where the question says the rule applies.
Section 80C (old regime): Maximum deduction = ₹1,50,000; Covers EPF, PPF, ELSS, life insurance premium, tuition fees, and similar items. Not available in the new regime.
Section 80CCD(1B) (old regime): Additional deduction up to ₹50,000 for own NPS contribution; Over and above the 80C limit.
Health cover premium, Section 80D (old regime): Deduction up to ₹25,000 for self and family, with a higher limit for senior citizen cover; Check the age of the insured persons in the case.
Tax with cess: Total tax = Tax before cess × 1.04; Health and education cess is 4%. Add surcharge only if income is high and the question mentions it.

How to solve Tax Planning in Case Studies questions

Use the same sequence for any tax planning case. It keeps your working clean and shows where the numbers come from.

1Read the client profile: age, income, regime, existing investments, goals, risk profile and liquidity need.
2List every income and gain by head: salary, interest, dividend, and capital gains by asset.
3Find the holding period for each sale and label each gain short term or long term.
4Apply the correct rate to each gain. Use the exemption limit once, then add 4% cess.
5Compute total tax under both regimes if the question asks for a comparison, and pick the lower figure.
6Recommend only tax-saving products that fit the client's risk, horizon and liquidity. Do not suggest 80C products if the new regime is better.
7Check the lock-ins and withdrawal rules of every product you recommend, then compare with the goal dates.
8Re-read the question to confirm what is asked: tax payable, tax saved, regime choice or product choice.

Quickest way: Sort, rate, compare, filter

When to use it: Use it for MCQs and caselet questions where time is short and the tax figures are small.

Underline the holding period and the asset type first. This decides the tax rate.
Pick the rate: equity short term 20%, equity long term 12.5% above ₹1,25,000, debt MF at slab rate.
Do the arithmetic once and add 4% cess last.
For regime questions, compute new regime first as it needs fewer inputs. Then check if old regime deductions can beat it.
Eliminate options that recommend a product the client cannot hold for its lock-in period or whose risk does not match the profile.

Common mistakes in Tax Planning in Case Studies

Applying 12.5% to the whole long-term equity gain.
Students forget the annual exemption of ₹1,25,000.
Fix: Subtract ₹1,25,000 from the total long-term gain first. If the gain is below this, the tax is nil.
Recommending 80C investments to a client on the new regime.
Students link tax saving with 80C by habit.
Fix: Check the regime first. If the new regime is chosen or cheaper, pick products on goal, risk and cost, not deduction.
Treating a debt mutual fund like equity for long-term gains.
Students apply the 12-month rule to every fund.
Fix: Check the fund type and purchase date. Units bought on or after 1 April 2023 in a debt fund are taxed at slab rate.
Forgetting cess or adding it at the wrong step.
Students rush the final line.
Fix: Add 4% on the tax amount at the end, not on the income.
Choosing a product only for tax benefit.
The case highlights the tax amount, so it seems the main point.
Fix: Test every product against risk profile, time horizon and liquidity. A tax-efficient product that fails suitability is a wrong answer.
Counting the holding period wrongly.
Students ignore the dates or mix up 12 and 24 months.
Fix: Use 12 months for listed equity and equity-oriented MFs. Use the period the question states for other assets. Count from the purchase date to the sale date.

Worked examples

Example 1

A resident client sold equity-oriented mutual fund units after 18 months, with STT paid. The gain was ₹2,25,000. She has no other long-term capital gain this year. Compute the tax with cess, ignoring surcharge. Use 12.5% above ₹1,25,000.

Show the solution

Holding period is 18 months, which is more than 12 months, so the gain is long term.
Taxable gain = ₹2,25,000 − ₹1,25,000 = ₹1,00,000.
Tax = 12.5% × ₹1,00,000 = ₹12,500.
Cess = 4% × ₹12,500 = ₹500.
Total tax = ₹12,500 + ₹500 = ₹13,000.

Answer: Total tax payable is ₹13,000.

Example 2

A salaried client has gross salary of ₹15,00,000. Under the old regime he can claim standard deduction ₹50,000, 80C ₹1,50,000, 80CCD(1B) ₹50,000 and 80D ₹25,000. Under the new regime the standard deduction is ₹75,000 and no other deduction applies. Old slabs: up to ₹2,50,000 nil; ₹2,50,001 to ₹5,00,000 5%; ₹5,00,001 to ₹10,00,000 20%; above 30%. New slabs: up to ₹4,00,000 nil; 4 to 8 lakh 5%; 8 to 12 lakh 10%; 12 to 16 lakh 15%. Add 4% cess, and ignore rebate and surcharge. Which regime is cheaper and by how much?

Show the solution

Old regime deductions = 50,000 + 1,50,000 + 50,000 + 25,000 = ₹2,75,000.
Old taxable income = 15,00,000 − 2,75,000 = ₹12,25,000.
Old tax: 5% × 2,50,000 = 12,500; 20% × 5,00,000 = 1,00,000; 30% × 2,25,000 = 67,500. Total = ₹1,80,000.
Old tax with cess = 1,80,000 × 1.04 = ₹1,87,200.
New taxable income = 15,00,000 − 75,000 = ₹14,25,000.
New tax: 5% × 4,00,000 = 20,000; 10% × 4,00,000 = 40,000; 15% × 2,25,000 = 33,750. Total = ₹93,750.
New tax with cess = 93,750 × 1.04 = ₹97,500.
Difference = 1,87,200 − 97,500 = ₹89,700.

Answer: The new regime is cheaper by ₹89,700 (₹97,500 against ₹1,87,200). He should not buy 80C products for tax. Choose them only if they suit his goals, risk and liquidity.

Exam tips

Read the regime in the case before anything else. Many options become wrong once you know it.
Watch the dates and holding periods. A sale one day short of the threshold changes the rate.
Check if the question gives its own rates. Use those, not the ones you remember.
Remember that a wrong answer costs marks in X-B, which has negative marking of 25% of the marks of that question. On a 2-mark caselet question, skip it or eliminate options before guessing.
Prefer the option that satisfies both tax efficiency and suitability. Tax benefit alone is rarely the right answer.

Practice questions from Case Studies in Comprehensive Financial Advice

Tax Planning in Case Studies in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Tax Planning in Case Studies: frequently asked questions

How is tax on equity mutual funds calculated in the X-B exam?

For units held more than 12 months with STT paid, long-term gains above ₹1,25,000 in the year are taxed at 12.5%. Gains on units held 12 months or less are taxed at 20%. Add 4% cess on the tax.

Is 80C useful under the new tax regime?

No. Section 80C deductions are not available in the new regime. If the new regime is cheaper, choose investments for goals and risk, not for tax deduction.

How do I compare the old and new regimes in a case?

Compute taxable income and tax under both, using the deductions that apply only to the old regime. Add cess to each and choose the lower total. Then adjust the product advice to match the regime chosen.

Are debt mutual fund gains taxed as long term?

For debt fund units bought on or after 1 April 2023, gains are taxed at the client's slab rate irrespective of holding period. Check the fund's classification and purchase date in the question.