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

Mr. Arvind Rao, a resident individual, sold listed equity shares (STT paid) after holding them for 10 months and made a gain of Rs 3,00,000. He has no other capital gains. Assuming the short-term capital gains rate on such equity is 20% (before cess), what is the tax on this gain before cess and surcharge?

The gain is short-term because the shares were held under 12 months. At the assumed 20% rate, tax before cess and surcharge is 20% of Rs 3,00,000, which equals Rs 60,000. No basic exemption applies to this special-rate gain beyond the stated assumption.

  1. ARs 30,000
  2. BRs 45,000
  3. CRs 60,000Correct
  4. DRs 37,500

Explanation

Holding of 10 months is under 12 months, so the gain is short-term. Tax = 20% x 3,00,000 = Rs 60,000. Rs 30,000 would use a 10% rate, and Rs 45,000 would use 15%, both wrong rates here; Rs 37,500 applies 12.5% (long-term rate) wrongly.

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