Ltcg on sale of share

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Querist : Anonymous

Querist : Anonymous (Querist)

14 March 2012 Dear Sir,
Our Co. holding shares of a Pvt. Ltd. company. we purchase these share on dif- diff. dates. Some are older than 12 months & some shares we purchased recently. What will be tax treatment if we sold our entire investment.
Whether LTCG will be exempt U/s 10 (38)? & STCG will be taxed @ 15%.
1) Pls suggest
2) How can we save tax

Thanks
Regards:
Rahul

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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14 March 2012 First of all you will have to calculate the period of holding for each acquisition and bifurcate the same into Long term & short term.

LTCG is exempt only if the shares are sold on a recognised stock exchange & STT has been paid on them.

As you said that the shares are of a private company, you will most probably sell the shares by private placement and accordingly STT will not be paid.

So, LTCG will not be exempt.
Similary, STCG is taxable @ 15% if STT has been paid on the sale.

In this case, the STCG shall be included in the normal income & taxable @ 30%.

Querist : Anonymous

Querist : Anonymous (Querist)

15 March 2012 Thanks Siddharth,
It means if we holds shares of pvt. ltd com for more than 12 Months than on sale we have to pay LTCG @ 20% & for holding less than 12M it will be taxed as per normal tax rate applicable to co.
Can our co. invest in other assets to save Tax?

Thanks

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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15 March 2012 You can avail exemption u/s 54EC by investing the amount in specified bonds. However, the same is available only if a LONG TERM CAPITAL ASSET has been transferred.

Further the maximum amount allowed to be invested is Rs 50 lakhs.

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