Capital Gain

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ashishmaraina

ashishmaraina (Querist)

16 February 2011 Can transfer of equity shares be considered as transfer of assets?

CMA. Dinesh S Adhikari, ACMA

CMA. Dinesh S Adhikari, ACMA (Expert)

16 February 2011 Yes, Equity Shares are capital asset therefore transfer of equity shares will attract to capital gain.

Please Note that if you keep equity shares more than one year then there will not be any capital gain as it is exempt u/s 10(38), provided you have paid Securities Transaction Tax and shares should be trasnferred through recognized stock exchange.

Regards!!!
Dinesh S. Adhikari

Message likes : 2 times

ashishmaraina

ashishmaraina (Querist)

17 February 2011 u haven't understood the question asked. In fact i wanted o ask that if a share holder of a company is selling his share of the equity shares and subsequently all the share holders are selling off their respective shares, can it be considered that the sale of shares was a way to dispose off or sell the business to some other entity and would it attract capital gain on transfer of assets of the company to some other person in this respect. Sorry for the wrong question conveyed to you..

CMA. Dinesh S Adhikari, ACMA

CMA. Dinesh S Adhikari, ACMA (Expert)

22 March 2012 Mr. Ashish,

Sorry for delay, actual i today itself saw your question again.

As far as i understood that you are saying transfer of business to another entity through the transfer of shares. If i right understood the question then my answer is given below.

Firstly, Company is separate entity in the eyes of law,
Secondly, Their is transfer of only share but not of assets or company(no sell of business), means First company will run as it was running earlier.
Thirdly, Shares are Capital Assets as per IT Act'1961.

So, if their is no any other transfer other than shares then it will attract only capital gain tax in the hands of those shareholders who transferred their shares and will not attract any other capital tax.
Capital gain tax would be possible only then when there would be transfer of assets or sell of business, but both situtations are not exist there, therefore not any capital gain liability, except on shares.

regards
Dinesh

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