Benefit of conversion of unit

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azim khan (Querist)
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29 October 2013 A company (A) has equity and debentures invested in other private company (B) for more than 5 years,
B Company is about to get acquired by other company i.e company (A) is selling its equity and debentures invested in (B) to other company.
Now if a month before the sale, if company (B) gets listed in recognized stock exchange and all the formalities such as transaction of transfer is covered by STT are adhered with. what benefit company (A) will get in terms of taxability on capital gain on sale of shares and debentures

Nikhil Kaushik

Nikhil Kaushik (Expert)
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29 October 2013 Yes. But remember mere listing on stock exchange is not sufficient. Company A can claim exemption against long term capital gains only if transaction of sale of shares is routed through the stock exchange and STT is paid.

azim khan

azim khan (Querist)
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29 October 2013 and what are the benefits as to the rate of taxation on capital gain

Nikhil Kaushik

Nikhil Kaushik (Expert)
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29 October 2013 once it is listed and shares are sold on the stock exchange, the whole of capital gains are exempted if the shares were held by the Company A for more than a year.

azim khan

azim khan (Querist)
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29 October 2013 you mean the listed shares holding should be more than 1 year or the holding should be taken as 5 years

Nikhil Kaushik

Nikhil Kaushik (Expert)
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29 October 2013 no. the overall holding period, including the period in which the shares were not listed should be more than 5 years.

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