NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Taxation (NISM XXI-A)
Mr. Iyer's PMS portfolio sold listed equity shares, held for 8 months, at a gain of Rs 2,00,000, on which securities transaction tax was paid. Assuming no other capital gains and that the investor treats the shares as capital assets, how is this gain classified?
The gain is a short-term capital gain. Listed equity shares must be held for more than 12 months to be long-term, and these were held for only 8 months, so the gain is taxed as short-term.
- AShort-term capital gainCorrect
- BLong-term capital gain
- CBusiness income only
- DExempt income
Explanation
Listed equity shares sold on a recognised exchange with STT paid are long-term only if held for more than 12 months. At 8 months, the holding is below that threshold, so the gain is a short-term capital gain. It is not exempt and not business income under the stated assumption.
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