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CA Intermediate · Taxation · Capital Gains

Rohan, a resident individual, sold listed equity shares on a recognised stock exchange in October 2026 after holding them for 30 months, and Securities Transaction Tax was paid on both purchase and sale. Sale consideration was Rs 6,40,000, cost of acquisition was Rs 3,00,000 and brokerage on sale was Rs 10,000. He has no other long-term capital gain in the year. What is the tax on this gain before cess, at the special rate of 12.5% with the annual exemption limit of Rs 1,25,000?

The tax is Rs 25,625. The long-term gain is Rs 3,30,000 after deducting brokerage and cost. Rs 1,25,000 is exempt, leaving Rs 2,05,000, which is taxed at 12.5%. Ignoring brokerage or the exemption limit gives the wrong figures.

  1. ARs 25,625Correct
  2. BRs 41,250
  3. CRs 41,000
  4. DRs 26,875

Explanation

Long-term capital gain = 6,40,000 - 10,000 - 3,00,000 = 3,30,000. After the Rs 1,25,000 exemption limit, the taxable amount is 2,05,000, and 12.5% of it is Rs 25,625. Rs 26,875 results from ignoring the brokerage. Rs 41,250 results from taxing the full gain without the exemption limit.

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