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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Mutual Funds

A client, Mr. Vikram Shah, invests Rs 12,00,000 in an equity-oriented mutual fund scheme. Net asset value (NAV) at purchase is Rs 40 per unit, and he buys 30,000 units. After 8 months he redeems all units at an NAV of Rs 46. Assuming current tax rules in which short-term capital gains on equity-oriented funds are taxed at 20% (ignore surcharge, cess and exit load), what is the tax payable?

The tax payable is Rs 36,000. The gain is 30,000 units times Rs 6, or Rs 1,80,000. Since the units are held for under twelve months, the gain is short-term and taxed at 20% under the stated rule, giving Rs 36,000.

  1. ARs 36,000Correct
  2. BRs 24,000
  3. CRs 72,000
  4. DRs 1,80,000

Explanation

Gain = 30,000 x (46 - 40) = Rs 1,80,000. Holding is under 12 months, so it is short-term and taxed at 20%: 1,80,000 x 20% = Rs 36,000. Rs 24,000 uses 12.5%-type long-term rate wrongly, and Rs 72,000 uses a 40% rate.

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