NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Taxation (NISM XXI-A)
A PMS client sold listed equity shares at a total value of ₹5,40,000 that were bought for ₹4,50,000 earlier in the same year and held for 7 months. Ignoring brokerage and other costs, and assuming a short-term capital gains tax rate of 20% (excluding surcharge and cess), what is the tax on this gain?
The tax is ₹18,000. The short-term gain is ₹5,40,000 minus ₹4,50,000, which is ₹90,000, and 20% of that amount is ₹18,000. The other values come from using the wrong rate, using the wrong base, or quoting the gain itself.
- A₹9,000
- B₹18,000Correct
- C₹10,800
- D₹90,000
Explanation
Gain = 5,40,000 - 4,50,000 = ₹90,000. Tax at 20% = 0.20 x 90,000 = ₹18,000. Check: 18,000/90,000 = 20%. ₹9,000 uses 10%, ₹10,800 applies 20% to 54,000 (wrong base), and ₹90,000 is the gain itself.
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