Skip to content

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

Ms. Neha Kapoor, a resident individual, bought listed equity shares for ₹2,00,000 and sold them after 8 months for ₹2,80,000, with STT paid on both transactions. She also has a long-term capital loss of ₹30,000 from other listed shares this year. Applying the current 20% rate on short-term gains under Section 111A (ignore cess and surcharge), what is her tax on the short-term gain?

The tax is ₹16,000. The ₹80,000 gain is short-term since shares were held 8 months, taxed at 20%. A long-term capital loss cannot be set off against a short-term gain, so the ₹30,000 loss gives no relief here.

  1. A₹16,000Correct
  2. B₹10,000
  3. C₹0
  4. D₹12,000

Explanation

The holding is under 12 months, so the gain of 80,000 is short-term under Section 111A. A long-term capital loss cannot be set off against a short-term gain; only against long-term gains. Tax = 20% x 80,000 = ₹16,000. ₹10,000 wrongly sets off the loss (50,000 x 20%).

Did you get it right without looking?

One question tells you little. A timed set on Taxation of Equity Products shows your real accuracy, how long you take and where you lose marks.

Practise Taxation of Equity ProductsFree diagnostic mock

More Taxation of Equity Products questions