NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Taxation
Mr. Iyer, a resident individual, redeems equity-oriented fund units after holding them for 20 months. Purchase cost was Rs 3,00,000 and sale value is Rs 4,40,000. He has no other capital gains this year. Assuming LTCG on listed equity-oriented units is taxed at 12.5% on gains above Rs 1,25,000, what is the tax before cess?
The tax before cess is Rs 1,875. The gain of Rs 1,40,000 is long-term because the holding exceeds 12 months. After the Rs 1,25,000 exemption, Rs 15,000 is taxable at 12.5%, giving Rs 1,875.
- ARs 0
- BRs 1,875Correct
- CRs 17,500
- DRs 5,500
Explanation
Holding period of 20 months is over 12 months, so the gain is long-term. Gain = 4,40,000 - 3,00,000 = 1,40,000. Taxable = 1,40,000 - 1,25,000 = 15,000. Tax = 12.5% x 15,000 = Rs 1,875. Rs 17,500 taxes the full gain without the exemption.
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