Income tax liability

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Sandeep Menon (Querist)
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21 December 2013 Dear sir,
I have applied equity shares in a private limited company @Rs 500/-.However the break-up value is rs 10/-
1)What will be my liability if i subscribe?
2)If I sell these shares @Rs 500/-having break-up value of Rs 10/- each to other purchaser.What will be my Tax Liability?

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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21 December 2013 if its private limited co then u need to apply rule 11U of income tax rules,1962

Sandeep Menon

Sandeep Menon (Querist)
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21 December 2013 But will my cost of acquisition be Rs 10/- or Rs 500/- or the fair market value of the shares

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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21 December 2013 cost of acquition is actual amount u paid for acquisition.

Sandeep Menon

Sandeep Menon (Querist)
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21 December 2013 Thank You Sir

Nikhil Kaushik

Nikhil Kaushik (Expert)
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21 December 2013 Tushar bhai I believe, Sandeep is asking for his personal tax liability.

Sandeep,

you tax liability shall depend on:

1. whether the said shares are listed or not.

2. for how long did you held these shares.

Share held for less than one year shall be taxable as short term capital gains

shares listed on stock exchange and for
which STT is paid, and held for more than a year - no tax.

unlisted shares and held for more than a year - long term capital gains.

Also, though not your concern, as Tushar bhai said, there may be company's tax liability too under Section 56(viia).

Sandeep Menon

Sandeep Menon (Querist)
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21 December 2013 But sir what will be the income tax liabilty if i sell these shares

Nikhil Kaushik

Nikhil Kaushik (Expert)
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21 December 2013 Since the shares are of private company, the taxation shall depend on the holding period. Please ignore my earlier message as far as it relates to listed shares.

Once it is determined whether it is short term or long term capital gains, taxability can be finalised.

Sandeep Menon

Sandeep Menon (Querist)
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21 December 2013 It is for mor than 12 months then taxablity depends on the cost of acquisition,now will the cost of acquisition be rs 500/- or rs 10/-or FMV

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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21 December 2013 Yes the period of holding will decide whther its long term or short term and accordingly u need to calculate...i had ans as the earlier question under the impression from co point of view.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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21 December 2013 then its long term capital gain and cost is the actual cost u paid for acquiring shares.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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21 December 2013 Sandeep,

I hope cumulatively, your query is resolved now!!

Sandeep Menon

Sandeep Menon (Querist)
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21 December 2013 Thank U all

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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21 December 2013 you are welcome.

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