NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Taxation of Equity Products
Meera, a resident individual, sold listed equity shares on which STT was paid at both purchase and sale. She held them for 10 months and made a gain of Rs 80,000. Her other income is high. Assume a short-term capital gains rate of 20% on such shares (Section 111A as per the current regime) and ignore surcharge and cess. What is the tax on this gain?
The tax is Rs 16,000. A 10-month holding of STT-paid listed equity is short-term, taxed at the assumed 20% special rate on Rs 80,000, ignoring surcharge and cess. The 10% rate applies only to long-term gains.
- ARs 8,000
- BRs 12,000
- CRs 16,000Correct
- DRs 24,000
Explanation
Holding of 10 months is under 12 months, so the gain is short-term. Section 111A rate of 20% on Rs 80,000 gives Rs 16,000. Rs 8,000 uses 10%, which is the long-term rate and wrong here; Rs 24,000 wrongly applies a 30% slab rate.
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