NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Taxation of Equity Products
Rohit, a resident individual, bought listed equity shares of an Indian company on the exchange for Rs 4,00,000 and sold them after 8 months, paying STT on both legs, for Rs 5,20,000. Brokerage and transfer expenses on the sale were Rs 2,000. What is the chargeable short-term capital gain, ignoring any other income?
The chargeable short-term capital gain is Rs 1,18,000. Listed equity held for 8 months is short-term, and the gain equals sale value of Rs 5,20,000 less cost of Rs 4,00,000 and transfer expenses of Rs 2,000.
- ARs 1,18,000Correct
- BRs 1,20,000
- CRs 1,30,000
- DRs 0
Explanation
Holding of 8 months is within the 12-month period for listed equity, so the gain is short-term. Gain = 5,20,000 - 2,000 expenses - 4,00,000 cost = Rs 1,18,000. Ignoring the expense gives Rs 1,20,000, which is wrong because transfer expenses are deductible.
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