An Investor purchased 1000 shares of HP Oil Limited on 1st April 2016 at a price of ₹ 1,200 each. The company allotted two shares against each share as bonus on 10th May 2016. The Company further issued Bonus shares in t

CS Professional · Capital Commodity and Money Market · PYQS · December 2017
An Investor purchased 1000 shares of HP Oil Limited on 1st April 2016 at a price of ₹ 1,200 each. The company allotted two shares against each share as bonus on 10th May 2016. The Company further issued Bonus shares in the ratio of one share against two shares held on 1st January 2017. The investor sold all the shares of the company on 25th February 2017 @ ₹ 500 each. What is the net gain to the investor presuming that the investor has to pay short term capital Gain Tax of 15%

Answer & Explanation:

Date of Purchase/Bonus Activity Number of Shares Cost 01.04.2016 Purchase 1000 x 1200 12,00,000 01.05.2016 Bonus 2:1 2000 x 0 0 01.01.2017 Bonus 1:2 1500 x 0 0 Total 4500 12,00,000 Sale of Shares on 25/02/2017 = 4500 x ₹ 500 = ₹ 22,50,000 Cost = ₹ 12,00,000 Net Profit on Sale of Shares = ₹ 10,50,000 Since all the shares were sold before one year, the profit shall be subject to Tax on Short Term Capital Gain @ 15% Tax on Capital Gain @ 15% on ₹ 10,50,000 = ₹ 1,57,500 Net Gain after Tax = ₹ 8,92,500

Topics: Capital Market

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