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CA Intermediate · Taxation · Capital Gains

Mr. Dev Anand, a resident individual, has in tax year 2026-27 a long-term capital gain of ₹2,10,000 on listed equity shares (STT paid) and a short-term capital loss of ₹50,000 on sale of gold. He has no other capital transactions. Ignoring cess, what is the tax on his long-term capital gain?

The tax is ₹4,375. The ₹50,000 short-term capital loss is set off against the ₹2,10,000 long-term gain, leaving ₹1,60,000. After the ₹1,25,000 exemption, ₹35,000 is taxed at 12.5%, which equals ₹4,375 before cess.

  1. A₹4,375Correct
  2. B₹10,625
  3. C₹20,000
  4. DNil

Explanation

A short-term capital loss can be set off against long-term capital gain, giving a net long-term gain of 2,10,000 − 50,000 = 1,60,000. The gain up to ₹1,25,000 is exempt, so taxable gain is ₹35,000, and tax at 12.5% is ₹4,375. Ignoring the set-off gives 85,000 × 12.5% = 10,625, which is wrong. Ignoring the exemption gives 20,000, also wrong.

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