Skip to content

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

Mr Arjun Mehta bought 10,000 listed equity shares of an Indian company at Rs 100 each in 2016, paying STT. The highest quoted price on 31 January 2018 was Rs 150 per share. He sold all the shares for Rs 260 per share on a recognised stock exchange after 23 July 2024, paying STT. Ignoring surcharge, cess and any other capital gains in the year, what is his tax on this gain? Assume LTCG on listed equity is taxed at 12.5% on gains above Rs 1,25,000.

The tax is Rs 1,21,875. The grandfathered cost is Rs 150 per share, so the long-term gain is Rs 11,00,000. After the Rs 1,25,000 exemption, Rs 9,75,000 is taxed at 12.5%. Using the original cost of Rs 100 would overstate the gain and the tax.

  1. ARs 1,21,875Correct
  2. BRs 1,84,375
  3. CRs 1,37,500
  4. DRs 1,95,000

Explanation

Grandfathered cost = higher of actual cost (Rs 100) and the lower of FMV on 31 Jan 2018 (Rs 150) and sale price (Rs 260), which is Rs 150. Gain = (260 - 150) x 10,000 = Rs 11,00,000. Less exemption of Rs 1,25,000 = Rs 9,75,000. Tax at 12.5% = Rs 1,21,875. Rs 1,84,375 results from wrongly using the actual cost of Rs 100.

Did you get it right without looking?

One question tells you little. A timed set on Capital Gains shows your real accuracy, how long you take and where you lose marks.

Practise Capital GainsFree diagnostic mock

More Capital Gains questions