Skip to content

NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Taxation (NISM XXI-A)

A PMS client's portfolio has realised a short-term capital loss on listed shares of Rs 50,000 and a long-term capital gain of Rs 1,20,000 on other listed shares in the same year. Under the set-off rules, what is the net capital gain?

The net gain is Rs 70,000 long-term. A short-term capital loss may be set off against long-term capital gains, so Rs 50,000 is deducted from the Rs 1,20,000 gain, leaving Rs 70,000 taxable as long-term gain.

  1. ARs 1,70,000 long-term gain
  2. BRs 70,000 long-term gainCorrect
  3. CRs 50,000 short-term loss carried forward
  4. DRs 1,20,000 long-term gain with the loss ignored

Explanation

A short-term capital loss can be set off against both short-term and long-term capital gains. Rs 1,20,000 minus Rs 50,000 gives Rs 70,000 net long-term gain. Adding the figures (Rs 1,70,000) is a sign error, and ignoring the loss wastes a permitted set-off.

Did you get it right without looking?

One question tells you little. A timed set on Taxation (NISM XXI-A) shows your real accuracy, how long you take and where you lose marks.

Practise Taxation (NISM XXI-A)Free diagnostic mock

More Taxation (NISM XXI-A) questions