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

Meera Iyer, a resident individual, bought 500 listed equity shares of an Indian company on 10 June 2022 at Rs 400 per share (Securities Transaction Tax paid on purchase). She sold all of them on 15 September 2025 at Rs 700 per share on a recognised stock exchange (STT paid). Assume the long-term capital gains exemption limit is Rs 1,25,000 for the year, she has no other capital gains, no grandfathering applies, brokerage is ignored, and the tax rate on long-term gains on listed equity is 12.5% plus applicable cess is to be ignored. What is the tax payable on this gain?

The tax payable is Rs 3,125. The shares were held over 12 months, so the Rs 1,50,000 gain is long-term. After the Rs 1,25,000 exemption, Rs 25,000 is taxed at 12.5%, giving Rs 3,125, ignoring cess.

  1. ARs 3,125Correct
  2. BRs 18,750
  3. CRs 22,500
  4. DRs 0

Explanation

Holding period is over 12 months, so the gain is long-term. Cost = 500 x 400 = Rs 2,00,000; sale = 500 x 700 = Rs 3,50,000; gain = Rs 1,50,000. After the Rs 1,25,000 exemption, taxable gain = Rs 25,000; tax at 12.5% = Rs 3,125. Rs 18,750 results from taxing the full gain at 12.5%, ignoring the exemption. Rs 22,500 wrongly applies the old 15% rate to the gain.

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