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

Under the Income-tax Act as applicable to listed equity shares, which of the following is a condition for a long-term capital gain on shares held on a recognised stock exchange?

Listed equity shares qualify as long-term capital assets when held for more than 12 months before transfer. If sold within 12 months, the gain is short-term. The 24 and 36 month periods apply to other asset classes, not to listed shares.

  1. AShares must be held for more than 12 months before transferCorrect
  2. BShares must be held for more than 24 months before transfer
  3. CShares must be held for more than 36 months before transfer
  4. DShares must be held for at least 6 months before transfer

Explanation

Listed equity shares are treated as long-term capital assets if held for more than 12 months. A holding of 12 months or less gives a short-term gain. The 24- and 36-month periods apply to other assets such as unlisted shares (24 months) and certain non-equity assets.

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