NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Taxation (NISM XXI-A)
A PMS client's portfolio realised a short-term capital loss of ₹2,00,000 on shares and a long-term capital gain of ₹5,00,000 on other shares in the same year. Ignoring exemption limits, rates and cess, what amount of long-term gain remains to be taxed after the permitted set-off?
The remaining long-term gain is ₹3,00,000. The ₹2,00,000 short-term loss is permitted to be set off against the ₹5,00,000 long-term gain, leaving ₹3,00,000. Adding the loss or ignoring the set-off would give wrong figures.
- A₹2,00,000
- B₹7,00,000
- C₹3,00,000Correct
- D₹5,00,000
Explanation
A short-term capital loss can be set off against a long-term capital gain. The remaining long-term gain is ₹5,00,000 − ₹2,00,000 = ₹3,00,000. ₹7,00,000 results from adding the loss, which is the wrong sign. ₹5,00,000 ignores the set-off.
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