NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Taxation
Meera, a resident individual, redeems equity-oriented fund units held for 3 years and realises a long-term capital gain of Rs 1,75,000 in the year, with no other capital gains. Assuming LTCG on equity is taxed at 12.5% on gains above Rs 1,25,000 (ignoring surcharge and cess), what is her tax?
Her tax is Rs 6,250. The exemption of Rs 1,25,000 reduces the taxable long-term gain to Rs 50,000, and 12.5% of that is Rs 6,250. Taxing the full Rs 1,75,000 would be wrong because the exemption limit applies first.
- ARs 21,875
- BRs 6,250Correct
- CRs 12,500
- DRs 0
Explanation
Taxable LTCG = 1,75,000 - 1,25,000 = Rs 50,000. Tax = 12.5% x 50,000 = Rs 6,250. Rs 21,875 wrongly taxes the whole gain (12.5% of 1,75,000).
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