NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Taxation of Other Products
Mr. Kapoor, a resident individual, bought a plot of land in 2019 and sold it after 5 years. Assume the sale proceeds are Rs 90 lakh and cost of acquisition is Rs 40 lakh, with no indexation and no other expenses, and assume a long-term capital gains tax rate of 12.5% plus no surcharge or cess for simplicity. What is his tax on the gain?
The tax is Rs 6,25,000. The long-term gain is sale proceeds of Rs 90 lakh minus cost of Rs 40 lakh, which is Rs 50 lakh. Applying the stated 12.5% rate to this gain gives Rs 6,25,000, ignoring surcharge and cess as assumed.
- ARs 6,25,000Correct
- BRs 5,00,000
- CRs 11,25,000
- DRs 10,00,000
Explanation
Gain = 90 - 40 = Rs 50 lakh. Tax at 12.5% = 6.25 lakh = Rs 6,25,000. Rs 11,25,000 applies the rate to the sale value. Rs 5,00,000 uses 10%, and Rs 10,00,000 uses 20%, which are not the stated rate.
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