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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Taxation of Equity Products

Mr. Raman Iyer sold listed equity shares through a stock exchange after holding them for 8 months and made a gain of Rs 1,20,000. Assuming the securities transaction tax was paid and the rate for short-term gains on listed equity under section 111A is 20%, ignoring surcharge and cess, and he has no other capital gains, what is the tax on this gain?

The tax is Rs 24,000. A holding of 8 months makes the gain short-term, and short-term gains on STT-paid listed equity are taxed at 20%. Applying 20% to Rs 1,20,000 gives Rs 24,000, ignoring surcharge and cess.

  1. ARs 12,000
  2. BRs 18,000
  3. CRs 24,000Correct
  4. DRs 36,000

Explanation

Holding of 8 months makes the gain short-term, and STT-paid listed equity is taxed at the special 20% rate. Tax = 1,20,000 x 20% = Rs 24,000. Rs 12,000 wrongly uses 10%, and Rs 36,000 wrongly applies a 30% slab rate.

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