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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Taxation

An investor realises a long-term capital gain of ₹2,25,000 on equity-oriented fund units in a financial year, with no other long-term gains. Assuming an exemption of ₹1,25,000 on such gains and a long-term tax rate of 12.5% (ignoring surcharge and cess), what is the tax payable?

The tax payable is ₹12,500. After deducting the ₹1,25,000 exemption from the ₹2,25,000 long-term gain, ₹1,00,000 remains taxable, and at 12.5% this gives ₹12,500. Taxing the full gain would wrongly give ₹28,125.

  1. A₹28,125
  2. B₹12,500Correct
  3. C₹14,062
  4. D₹12,500 plus cess only

Explanation

Taxable gain = 2,25,000 − 1,25,000 = ₹1,00,000. Tax = 1,00,000 × 12.5% = ₹12,500. ₹28,125 taxes the whole gain without exemption (2,25,000 × 12.5%). ₹14,062 is an arbitrary mismatch and cess is ignored here.

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