LTCG .. FMV to be considered

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This discussion clarifies the calculation of Long Term Capital Gains (LTCG) for shares held before January 31, 2018. The key question is whether to use the Fair Market Value (FMV) as of that date or an adjusted rate after a bonus issue. The consensus is to use the FMV of 305 for shares held on 31/01/2018. Bonus shares issued after this date are considered to have a cost of zero, meaning their entire sale proceeds are taxable as LTCG.

K.G.Shah

K.G.Shah (Querist)

29 December 2020 Hello ..!
Mr. A was holding security prior to 31/1/2018 .
The FMV as on 31/1/2018 was 305. ( as per bhav copy of NSE).

Then company declared bonus 3: 1 .
Adjusted closing rate in same ratio comes 229.

Now calculating gain which rate to be considered 305 or 229..

Please advise urgently .. return is pending .

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

29 December 2020 Consider 305 for all holdings as on 31/01/2018. Bonus declared after 31/01/2018 you consider cost as zero.

K.G.Shah

K.G.Shah (Querist)

29 December 2020 Sir , so in case of sale of bonus share, the cost is zero.
It means entire sale proceeds of Sale of bonus shares will be long term capital gain and is taxable ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

30 December 2020 Yes it's.......................

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