NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Taxation (NISM XXI-A)
A PMS client's investment in a listed equity share was bought for ₹4,00,000 and sold after 8 months for ₹5,50,000, with brokerage of ₹2,000 on the sale and no other costs. Assuming short-term capital gains on listed equity are taxed at a flat 20% (ignore surcharge and cess), what is the tax payable on this transaction?
Net short-term gain is sale value 5,50,000 less cost 4,00,000 less brokerage 2,000, which equals 1,48,000. At the flat 20% rate the tax is ₹29,600. Ignoring brokerage would wrongly give ₹30,000.
- A₹29,600Correct
- B₹30,000
- C₹29,200
- D₹27,600
Explanation
Gain = 5,50,000 - 4,00,000 - 2,000 = 1,48,000. Tax at 20% = 29,600. ₹30,000 results from ignoring brokerage (1,50,000 x 20%). ₹29,200 comes from deducting brokerage twice. ₹27,600 comes from wrongly applying the 12.5% rate and a different base.
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