Sale of unquoted shares in random way

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

26 September 2017 Whether an investor can sale its holding, acquired in multiple lots, in a way that will result NIL capital gain in the hands of investor ?

Example :- Mr A acquired shares of XYZ Ltd in 2010 - 5000 Shares ,i.e. lot 1 and in 2015 - 3000 Shares, i.e. lot 2 (Both allotment / acquisition is in paper form).

Please suggest, whether Mr A can sale 2800 Shares from both the lots, i.e. (2000 Shares from lot 1 and 800 shares from lot 2) ?
Is there any restriction to sale from a single lot ?

Also provide any write up / notes if available ..

K Srinivas, CMA CS

K Srinivas, CMA CS (Expert)
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26 September 2017 i assume the shares are held in demat form

K Srinivas, CMA CS

K Srinivas, CMA CS (Expert)
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26 September 2017 If yes, then the rule of First in first out (FIFO) applies which means that the first bought shares are sold first. No selective basis is allowed

Querist : Anonymous

Querist : Anonymous (Querist)

26 September 2017 no shares are in physical form

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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23 July 2025 Got it! Here’s a clear explanation about selling unquoted shares held in multiple lots (physical form) and whether you can choose which shares to sell to minimize capital gains:

1. Sale of Shares Held in Physical Form – Selective Sale Allowed?
For shares held in physical form (paper certificates), you can sell any shares from any lot selectively. There is no strict FIFO (First In First Out) rule applicable like in demat shares.

This means Mr. A can sell 2000 shares from lot 1 (2010) and 800 shares from lot 2 (2015) as per his choice.

You can decide the sale lot-wise to manage capital gains tax liability.

2. Tax Implication
Capital gain calculation should be done separately for each lot based on actual acquisition cost and sale consideration.

The cost of acquisition and holding period of respective shares must be used.

This allows strategic selling to reduce capital gains tax by choosing shares with higher cost or longer holding period.

3. If Shares Were in Demat Form
For shares held in demat form, FIFO method is generally applicable, i.e., shares bought earlier are deemed sold first.

No selective sale basis is allowed in demat shares.

But since your shares are physical, this rule does not apply.

4. Additional Notes
Make sure to maintain proper records of the share certificates and transaction details for each lot.

While filing income tax, clearly disclose sale and cost details per lot to avoid confusion.

If shares are sold over multiple years, keep track of gains separately for each year.

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