Capital gain

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BHUVANESH N (Querist)

09 February 2018 If the repayment of loan by way of shares will be regarded as transfer and attract capital gain?

Pls clarify.

Arpit

Arpit (Expert)

09 February 2018 As per Section 2(47) transfer in relation to a a capital asset includes sale, exchange or relinquishment of the asset.

Hence, it is clear that it will attract capital gain tax

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BHUVANESH N

BHUVANESH N (Querist)

09 February 2018 Thanks for the reply. please clarify if gift of shares held in a pvt ltd will attract capital gain

Arpit

Arpit (Expert)

09 February 2018 Yes you can do so but if you will gift the same to other person then it will become the income of the receiver as Income from Other Sources under the provisions of section 56(2)(vii). Further, you will also need to think about the treatment of loan taken from that party.

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BHUVANESH N

BHUVANESH N (Querist)

09 February 2018 Thanks for the reply.

Sorry to disturb you. I didn't get "Further, you will also need to think about the treatment of loan taken from that party."

Arpit

Arpit (Expert)

09 February 2018 Since you have taken loan and in lieu of that you are issuing the shares. Therefore, if you gift the shares then what about the loan. That will still remain outstanding in the books.

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BHUVANESH N

BHUVANESH N (Querist)

09 February 2018 Understood. Both are different transactions. Anyway thanks for your input.

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