Calculating capital gains on shares when the cost of purchase is unknown can be challenging. However, there are a few methods you can use to determine the cost of acquisition and calculate the capital gains. Here's a general approach:
1. Determine the fair market value (FMV) as of 31st January 2018
If the shares were held in physical form, you can consider the FMV of the shares as on 31st January 2018 as the cost of acquisition. The FMV can be obtained from reliable sources like stock exchange websites or financial newspapers for the respective date.
2. Calculate the capital gains
Once you have the FMV, you can calculate the capital gains using the following formula: Capital Gains = Selling Price - Cost of Acquisition
Here, the selling price is the amount for which you sold the shares, and the cost of acquisition is the FMV determined as of 31st January 2018.
3. Apply the relevant tax rate
Depending on the holding period of the shares, the capital gains may be classified as either short-term or long-term. Short-term capital gains are usually taxed at a higher rate than long-term capital gains. Determine the applicable tax rate as per the tax laws.
4. Pay the applicable taxes
Calculate the tax liability by applying the appropriate tax rate to the capital gains.
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