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CA Final · Integrated Business Solutions (Multidisciplinary Case Study with Strategic Management) · Direct Tax Laws & International Taxation

Case: Rohan Mehta, a resident individual, sold a listed equity share held for 18 months on a recognised stock exchange, with STT paid on both acquisition and transfer. Sale value was Rs 5,00,000 and cost Rs 3,00,000. Which statement correctly describes the capital gain, ignoring any exemption threshold?

It is a long-term capital gain of Rs 2,00,000, because listed equity shares held for more than 12 months are long-term assets, and gain is sale value of Rs 5,00,000 less cost of Rs 3,00,000.

  1. ALong-term capital gain of Rs 2,00,000Correct
  2. BShort-term capital gain of Rs 2,00,000
  3. CLong-term capital gain of Rs 5,00,000
  4. DShort-term capital gain of Rs 3,00,000

Explanation

Listed equity shares held for more than 12 months are long-term assets. Gain = 5,00,000 - 3,00,000 = Rs 2,00,000. Classifying it as short-term wrongly uses a shorter holding period.

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