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Inheritance of shares

Hiten Parekh (B.Com) (25 Points)

05 June 2013

Sir

My querry is on Inheritance of Shares, if & when I do, from my parents. Once I do inherit the shares, and suppose I want to sell part of those, in that case ..

(a) how would the Capital Gains tax, if any, be calculated

(b) in case I do not have record of the Cost of acquisition of these shares, in that case how does one arrive at the Capital Gains tax on Sale of such (inherited) shares

Awaiting reply

H.P. from Mumbai

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3 Replies

Babita (Industrial Trainee) (106 Points)
Replied 05 June 2013

Hi...

Yes, it will attract Capital Gains tax when you sell the shares. and the cost of acquisition will be cost paid by your parents.

Regards,

Babita

Swami Ayyappa Nuli (TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER) (1372 Points)
Replied 05 June 2013

here the applicability of capital gain tax will depend upon wheather the shares are listed or not

if listed,no capital gain tax,as u r liable to pay STT(SECURITY TRANSACTION TAX)

If not listed,capital gain tax will apply

note:indexation will apply from the date where your parents acquired for shares

so if they are not listed computation are as follows

sale consideration=2000000

less:indexed cost of indexation=1500000

long term capital gain=500000

Hiten Parekh (B.Com) (25 Points)
Replied 06 June 2013

Thanks for the reply!

Both of you are basically saying that Capital Gains if chargeable.

But, if it is a Long term investment (more than 1 year) AND it is sold, is it not then Exempt from Tax as a Long term Gains and not Short Term (less than 1 year) ?

Regards...