LONG TERM CAPITAL GAINS ON UNQUOTED EQUITY SHARES

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This discussion clarifies how to calculate long-term capital gains tax on unquoted equity shares, particularly when selling below book value. It explains that the Fair Market Value (FMV) will be used as the sale consideration if the actual sale price is lower, with FMV determined by specific rules. The standard tax rate is 20% with indexation benefits, but the possibility of paying 10% without indexation is also explored.

JITHESH

JITHESH (Querist)
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24 August 2022 I AM SELLING UNQUOTED EQUITY SHARES LESS THAN THE BOOK VALUE. HOW TO WORK OUT OUT THE LONG TERM CAPITAL GAIN TAX. IS THERE ANY MISTAKE IN TAKING THE ACTUAL SALE AS SALE CONSIDERATION WHILE WORKING THE TAX.
ONE MORE THING, CAN I PAY CAPITAL GAIN TAX AT 10% WITHOUT INDEXATION. STATUS IS RESIDENT.
KINDLY HAVE YOUR OPINION

Adv. Ravish Bhatt, ADIT, CIOT

Adv. Ravish Bhatt, ADIT, CIOT (Expert)
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27 August 2022 Sale of unlisted securities will invite capital gain Tax at the rate of 20% with indexation benefit in terms of s.112 of the ITA, 1061.

In terms of s.50CA of ITA, 1961, if sale consideration for unquoted shares is less than the Fair Market Value, for the purpose of computation of capital gains FMV will be taken as sale consideration. FMV will be calculated in terms of rule 11UA of the Income Tax Rules, 1962.

JITHESH

JITHESH (Querist)
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29 August 2022 OK THANK YOU SIR, LET ME CLEAR MY DOUBT I HAVE UNQUOTED SHARES SELLING ABOVE BOOK VALUE WITH OUT INDEXATION WHAT WILL BE THE RATE OF CAPITAL GAINS.

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