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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Case Studies in Comprehensive Financial Advice

Caselet: Mr. Iyer, a resident individual under the old tax regime, sold listed equity shares after holding them for 18 months and made a long-term capital gain of Rs 2,50,000, with no other capital gains in the year. Assume STT was paid, the LTCG exemption limit is Rs 1,25,000 and the LTCG rate is 12.5% (ignore surcharge and cess). What is the tax payable on this gain?

The tax payable is Rs 15,625. Listed equity held beyond 12 months gives long-term gains, of which the first Rs 1,25,000 is exempt. The remaining Rs 1,25,000 is taxed at 12.5%, producing Rs 15,625. Taxing the full gain would wrongly give Rs 31,250.

  1. ARs 15,625Correct
  2. BRs 31,250
  3. CRs 46,875
  4. DRs 62,500

Explanation

Taxable LTCG = 2,50,000 - 1,25,000 = 1,25,000. Tax at 12.5% = Rs 15,625. Rs 31,250 taxes the whole gain, Rs 62,500 uses 25%, and Rs 46,875 uses 37.5% of the taxable amount, an invalid rate.

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