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

A resident individual's PMS account sold listed equity shares (held over 12 months) with a long-term capital gain of Rs 3,00,000 in a year, with no other capital gains, and STT was paid. Assume long-term gains on listed equity are taxed at 12.5% on gains above an exemption of Rs 1,25,000, ignoring cess and surcharge. What is the tax?

The tax is Rs 21,875. After deducting the Rs 1,25,000 exemption from the Rs 3,00,000 long-term gain, Rs 1,75,000 remains taxable, and 12.5% of that equals Rs 21,875, ignoring cess and surcharge.

  1. ARs 21,875Correct
  2. BRs 37,500
  3. CRs 15,625
  4. DRs 60,000

Explanation

Taxable gain = 3,00,000 - 1,25,000 = 1,75,000. Tax = 12.5% of 1,75,000 = Rs 21,875. Rs 37,500 taxes the whole gain without the exemption. Rs 15,625 wrongly applies 12.5% to only 1,25,000.

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