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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Case Studies in Comprehensive Financial Advice

Ms. Anita Rao sold listed equity shares, held for 18 months, realising a long-term capital gain of Rs 2,25,000 and no other capital gains in the year. Assume the exemption limit of Rs 1,25,000 and tax of 12.5% on the excess, ignoring surcharge and cess. What is her tax on this gain?

The tax is Rs 12,500. The gain above the Rs 1,25,000 exemption is Rs 1,00,000, and long-term gains on listed equity are taxed at 12.5% on that excess. Taxing the full gain or using a 10% rate gives wrong answers.

  1. ARs 28,125
  2. BRs 12,500Correct
  3. CRs 40,625
  4. DRs 11,250

Explanation

Taxable gain = 2,25,000 - 1,25,000 = 1,00,000. Tax at 12.5% = Rs 12,500. Rs 28,125 taxes the whole gain, Rs 40,625 adds the exemption wrongly to the gain, and Rs 11,250 uses a 10% rate.

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