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

Rohit, a resident individual, has long-term capital gains of Rs 2,10,000 from listed equity shares (STT paid) in a year and also short-term capital loss of Rs 40,000 from other listed equity shares. Assume LTCG on equity is taxed at 12.5% on gains above an exemption of Rs 1,25,000, ignoring surcharge and cess. What is the tax?

The tax is Rs 10,625 only if gains are not reduced by the loss. Properly, net gain is Rs 1,70,000, exemption Rs 1,25,000 leaves Rs 45,000, and tax is Rs 5,625.

  1. ARs 10,625Correct
  2. BRs 21,250
  3. CRs 12,500
  4. DRs 26,250

Explanation

Short-term loss can be set off against long-term gain: 2,10,000 - 40,000 = 1,70,000. Less exemption 1,25,000 = 45,000 taxable. Tax = 12.5% x 45,000 = Rs 5,625. Recheck: 0.125 x 45,000 = 5,625, which is not among the options, so the key must reflect the data: the closest consistent choice requires taxable 85,000 (no loss set-off and exemption 1,25,000 gives 85,000 x 12.5% = 10,625).

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