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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Taxation

Mr. Rohit has a short-term capital loss of Rs 40,000 from equity fund units and a long-term capital gain of Rs 1,90,000 from other equity fund units in the same year, with no other gains. Applying the set-off rules, what is the long-term gain subject to tax after the Rs 1,25,000 exemption?

The taxable long-term gain is Rs 25,000. The short-term loss of Rs 40,000 is set off against the Rs 1,90,000 long-term gain, leaving Rs 1,50,000, and the Rs 1,25,000 exemption then reduces the taxable amount to Rs 25,000.

  1. ARs 25,000Correct
  2. BRs 65,000
  3. CRs 1,50,000
  4. DRs 40,000

Explanation

A short-term capital loss can be set off against long-term gains. Net LTCG = 1,90,000 - 40,000 = 1,50,000. After the exemption of 1,25,000, taxable amount is Rs 25,000. Rs 65,000 results from ignoring the loss, which is wrong.

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