NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Taxation of Equity Products
Rohan bought listed equity shares of an Indian company for Rs 4,00,000 in 2022 and sold them in the current year for Rs 5,60,000 on a recognised exchange with STT paid. He has no other capital gains this year and no brought-forward losses. Assume a long-term capital gains exemption of Rs 1,25,000 and a rate of 12.5% on the excess (ignore surcharge and cess). What is the tax on this gain?
The tax is Rs 4,375. The long-term gain is Rs 1,60,000; after the Rs 1,25,000 exemption, Rs 35,000 remains taxable, and 12.5% of that amount is Rs 4,375, ignoring surcharge and cess.
- ARs 4,375Correct
- BRs 20,000
- CRs 0
- DRs 7,000
Explanation
LTCG = 5,60,000 - 4,00,000 = 1,60,000. Less exemption 1,25,000 = 35,000 taxable. Tax at 12.5% = 4,375. Rs 20,000 wrongly taxes the full gain at 12.5%; Rs 7,000 applies 20% to the taxable part.
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