CA Umesh Sharma
Quick Summary
Arjuna (Fictional Character): Krishna, the Tata Technologies IPO has created a buzz in the financial markets. The taxpayers are very eager to know more about the concept of IPO, so please shed light on the same. Krishna (Fictional Character): Arjuna, IPO stands for Initial Public Offering. Its a
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FAQ :
An IPO, or Initial Public Offering, is when a private company offers a portion of its shares to the public for the first time, allowing it to be listed and traded on a stock exchange.
There is no income tax on listing gains when shares are allotted under an IPO. Taxability occurs upon selling the shares, depending on the holding period: short-term gains (under 12 months) are taxed at 15%, and long-term gains (over 12 months) are taxed at 10% on gains above £100,000.
Companies need shareholder approval, must issue a Red Herring Prospectus with issue details, maintain a separate bank account for raised funds, and ensure at least 90% of the issue is subscribed. They must also follow SEBI guidelines.
If an IPO issue is not subscribed by at least 90%, it is considered a failure, and the company is required to refund the money raised.
Long-term capital gains on listed shares are taxed at a rate of 10% on the gain exceeding £100,000. Gains up to £100,000 are exempt from income tax.
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