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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Capital Gains

Caselet: Rohan, a resident individual, has no other income-tax adjustments to consider. During the year he sold listed equity shares (STT paid on both purchase and sale) held for 8 months at a gain of Rs 2,00,000, and listed equity shares held for 20 months at a gain of Rs 1,50,000. He also has a short-term capital loss of Rs 50,000 on other listed equity shares. Assume the rates of 20% on short-term and 12.5% on long-term gains with a Rs 1.25 lakh long-term exemption, and ignore cess and surcharge. What is his total capital gains tax?

Total tax is Rs 33,125. Short-term gain after set-off of the loss is Rs 1,50,000 taxed at 20%, giving Rs 30,000. Long-term gain of Rs 1,50,000 less the Rs 1.25 lakh exemption leaves Rs 25,000 taxed at 12.5%, giving Rs 3,125.

  1. ARs 30,000
  2. BRs 33,125Correct
  3. CRs 37,500
  4. DRs 55,000

Explanation

Shares held for more than 12 months are long-term, so the 8-month gain is short-term and the 20-month gain is long-term. Net short-term gain = 2,00,000 - 50,000 = 1,50,000, taxed at 20% = 30,000. Long-term gain 1,50,000 less 1,25,000 exemption = 25,000 at 12.5% = 3,125. Total = 33,125.

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