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CMA Intermediate · Direct and Indirect Taxation · Income which does not form part of Total Income

Meera, a resident individual, is an employee of an Indian software company. She bought GDRs of the company in foreign currency under a notified Employees' Stock Option Scheme. In the tax year she has GDR dividend of Rs 50,000, long-term capital gain on the GDRs of Rs 4,00,000 and other income of Rs 9,00,000. Applying section 193 of the Income-tax Act, 2025, the tax on the GDR-related income at special rates, before cess, is:

The special-rate tax is Rs 55,000. Under section 193 the GDR dividend of Rs 50,000 is taxed at 10%, giving Rs 5,000, and the long-term capital gain of Rs 4,00,000 at 12.5%, giving Rs 50,000. The other Rs 9,00,000 is taxed at normal rates.

  1. ARs 55,000Correct
  2. BRs 50,000
  3. CRs 5,000
  4. DRs 1,05,000

Explanation

Dividend Rs 50,000 x 10% = Rs 5,000. LTCG Rs 4,00,000 x 12.5% = Rs 50,000. Total = Rs 55,000. The Rs 9,00,000 is taxed at rates in force separately. Rs 50,000 omits the dividend tax, and Rs 5,000 omits the gain.

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