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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Taxation of Other Products

Caselet: Mr Rao, aged 40, holds physical gold bought for Rs 2,00,000 in 2019. He sold it after 3 years for Rs 3,50,000. Assume gold is a non-equity capital asset with long-term holding period beyond 24 months, and LTCG on such an asset is taxed at a flat 12.5% without indexation, ignoring cess. What is the tax payable on this sale?

Tax is Rs 18,750. The long-term gain is the sale price of Rs 3,50,000 less the cost of Rs 2,00,000, which is Rs 1,50,000, taxed at the flat 12.5% rate without indexation under the stated assumptions, giving Rs 18,750 before cess.

  1. ARs 18,750Correct
  2. BRs 22,500
  3. CRs 37,500
  4. DRs 43,750

Explanation

Gain = 3,50,000 − 2,00,000 = Rs 1,50,000. Tax at 12.5% = 1,50,000 × 0.125 = Rs 18,750. Rs 22,500 uses 15%, Rs 37,500 uses 25%, and Rs 43,750 taxes the sale value at 12.5%, which is a wrong base.

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