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

A PMS client's portfolio realises a short-term capital gain of Rs 2,00,000 and a short-term capital loss of Rs 80,000 on different listed equity shares in the same financial year. Ignoring the basic exemption, surcharge, cess and any rate, what is the net short-term capital gain on which tax is computed?

The net short-term capital gain is Rs 1,20,000, found by setting off the Rs 80,000 short-term loss against the Rs 2,00,000 short-term gain. Tax is computed on this net figure, not on the gross gain or by adding the loss.

  1. ARs 2,80,000
  2. BRs 1,20,000Correct
  3. CRs 80,000
  4. DRs 2,00,000

Explanation

Net short-term gain = 2,00,000 - 80,000 = Rs 1,20,000. Adding the two gives 2,80,000, which is a sign error. Taxing only the loss or only the gain ignores the set-off. Check: 1,20,000 + 80,000 = 2,00,000.

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