NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Taxation (NISM XXI-A)
A resident individual sells listed equity shares through her PMS account after holding them for 8 months, and the shares are not held as stock-in-trade. How is the gain classified?
The gain is a short-term capital gain. Listed equity shares must be held for more than 12 months to qualify as long-term, and 8 months falls short of that. Business income treatment would apply only if the shares were stock-in-trade, which is not the case here.
- AShort-term capital gainCorrect
- BLong-term capital gain
- CBusiness income
- DIncome from other sources
Explanation
Listed equity shares are long-term only if held for more than 12 months. Eight months is below that threshold, so the gain is a short-term capital gain. Business income applies only if the shares are held as stock-in-trade, which the question rules out.
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