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

A PMS client's portfolio shows gross realised short-term gains of Rs 5,00,000 and short-term losses of Rs 1,40,000 in a year, and PMS fees of Rs 60,000 are charged. Ignoring other items, what is the net short-term capital gain figure before applying the tax rate, if fees are treated as not deductible against capital gains?

The net short-term capital gain is Rs 3,60,000, found by subtracting the Rs 1,40,000 loss from the Rs 5,00,000 gain. The PMS fee of Rs 60,000 is stated as not deductible against capital gains, so it does not reduce this figure.

  1. ARs 3,00,000
  2. BRs 3,60,000Correct
  3. CRs 4,40,000
  4. DRs 5,00,000

Explanation

Net gain = 5,00,000 - 1,40,000 = 3,60,000. The fee of Rs 60,000 is not deductible from capital gains as the question states, so 3,00,000 is wrong because it deducts the fee. Rs 4,40,000 adds the loss instead of subtracting it wrongly, and 5,00,000 ignores the loss.

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