NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Capital Gains
Mr. Arvind Nair, a resident individual, sold listed equity shares (STT paid) after holding them for 8 months. Purchase cost was Rs 4,00,000 and sale consideration was Rs 4,90,000, with no other expenses. Assume the short-term capital gains rate under Section 111A is 20%, ignoring surcharge and cess. What is the tax on this gain?
The tax is Rs 18,000. The shares were held for 8 months, so the gain of Rs 90,000 is short-term, and at the stated 20% rate the tax is Rs 18,000. Using 10% or 30% gives the wrong figures.
- ARs 18,000Correct
- BRs 9,000
- CRs 27,000
- DRs 14,000
Explanation
Gain = 4,90,000 - 4,00,000 = Rs 90,000. It is short-term as held for under 12 months, taxed at the stated 20%: 90,000 x 20% = Rs 18,000. Rs 9,000 wrongly uses 10%, and Rs 27,000 uses 30%.
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