NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Taxation of Equity Products
Caselet: Meera, a resident individual, sold listed equity shares (STT paid) held for 3 years and realised a long-term capital gain of Rs 1,75,000 in the year. She has no other long-term gains and no grandfathered shares. Assume long-term capital gains on listed equity are taxed at 12.5% on gains exceeding Rs 1,25,000, with 4% cess, and her other income is high. What is the tax payable on this gain including cess?
The tax payable is Rs 6,500. Only the gain above Rs 1,25,000, that is Rs 50,000, is taxed at 12.5%, giving Rs 6,250, and 4% cess of Rs 250 is added.
- ARs 6,500Correct
- BRs 6,250
- CRs 21,875
- DRs 22,750
Explanation
Taxable gain = 1,75,000 - 1,25,000 = Rs 50,000. Tax at 12.5% = Rs 6,250. Cess at 4% adds Rs 250, giving Rs 6,500. Taxing the full gain gives Rs 21,875 before cess (Rs 22,750 with cess), which ignores the exemption limit.
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