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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Taxation

Under the current Indian tax law, a resident individual earns a long-term capital gain of Rs 1,60,000 on listed equity-oriented mutual fund units, with no other LTCG in the year. Assuming the exemption limit of Rs 1,25,000 and a rate of 12.5% (ignoring surcharge and cess), what is the tax payable on this gain?

The tax is Rs 4,375. The first Rs 1,25,000 of long-term capital gains on equity-oriented funds is exempt in a year, leaving Rs 35,000 taxable at 12.5%. Surcharge and cess are ignored here, so the tax equals 12.5% of the excess.

  1. ARs 20,000
  2. BRs 4,375Correct
  3. CRs 4,000
  4. DRs 3,750

Explanation

Taxable LTCG = 1,60,000 - 1,25,000 = 35,000. Tax at 12.5% = 4,375. Rs 20,000 results from taxing the full gain at 12.5%. Rs 4,000 applies 10% to the excess and Rs 3,750 uses a wrong base.

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