NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Taxation of Equity Products
Ms. Kavita Rao, a resident individual, has total taxable income only from long-term capital gains on listed equity shares (STT paid) of Rs 2,00,000 in the year. Assume the long-term gain on listed equity is taxed at 12.5% above an exemption limit of Rs 1,25,000 and she has no other income. Ignoring cess and any rebate, what is the tax on this gain?
The tax is Rs 9,375. The first Rs 1,25,000 of long-term gain on listed equity is exempt, so the taxable gain is Rs 75,000. Taxing Rs 75,000 at 12.5% gives Rs 9,375, ignoring cess and rebate.
- ARs 9,375Correct
- BRs 25,000
- CRs 15,625
- DRs 6,250
Explanation
Gain above the Rs 1,25,000 exemption = 2,00,000 - 1,25,000 = Rs 75,000. Tax = 75,000 x 12.5% = Rs 9,375. Rs 25,000 taxes the whole gain at 12.5%; Rs 15,625 is 12.5% of 1,25,000, the exempt portion.
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