NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Taxation of Equity Products
Mr. Dev Malhotra bought 500 listed shares at Rs 600 on 10 March 2017 (price on 31 January 2018 was Rs 900) and sold them in 2025 at Rs 1,500 per share, STT paid. Under the grandfathering rules, what is the cost of acquisition per share for computing long-term capital gain, assuming the fair market value on 31 January 2018 was Rs 900?
The cost is Rs 900 per share. Under grandfathering, cost is the higher of actual cost and the lower of the 31 January 2018 fair market value and the sale price; the lower of Rs 900 and Rs 1,500 is Rs 900, which exceeds Rs 600.
- ARs 900Correct
- BRs 600
- CRs 1,500
- DRs 750
Explanation
Cost is the higher of actual cost (Rs 600) and the lower of FMV on 31 January 2018 (Rs 900) and sale value (Rs 1,500). The lower of 900 and 1,500 is 900; the higher of 600 and 900 is Rs 900. Gain per share is Rs 600.
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