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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Taxation of Equity Products

Meera sold listed equity shares on a recognised stock exchange after holding them for 18 months, with STT paid on both purchase and sale. Under the current regime, how would the gain be classified and which rates apply?

Holding listed shares for 18 months makes the gain long-term. With STT paid, it is taxed at 12.5% on total long-term gains above Rs 1.25 lakh in the year, with no indexation benefit. The 20% rate applies only to short-term gains.

  1. ALong-term capital gain, taxed at 12.5% on gains above the annual exemption limit of Rs 1.25 lakhCorrect
  2. BShort-term capital gain, taxed at 20%
  3. CLong-term capital gain, taxed at 20% with indexation
  4. DShort-term capital gain taxed at slab rates

Explanation

Listed equity shares held for more than 12 months give long-term gains. Under the current regime, LTCG on such shares is taxed at 12.5% on gains exceeding Rs 1.25 lakh in a year, without indexation. Short-term gains (held up to 12 months) are taxed at 20%.

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