Tax on amount received for fractional shares
This query is : Resolved
Quick Summary
20 March 2024
Hi Team,
Sometimes during corporate actions like demerge, bonus, split etc an amount is received for fractional shares. Could you please advise how it is taxed? Is it SHORT TERM CAPITAL GAIN? If yes it is taxed at 15% or as per income tax slab rate?
Kindly let me know if query is not clear.
Sometimes during corporate actions like demerge, bonus, split etc an amount is received for fractional shares. Could you please advise how it is taxed? Is it SHORT TERM CAPITAL GAIN? If yes it is taxed at 15% or as per income tax slab rate?
Kindly let me know if query is not clear.
CA R SEETHARAMAN
(Expert)
20 March 2024
It will fall under short term capital gains taxed under 15%.
22 March 2024
Hi Sir,
I have another query on the same issue. In case of demerger , as per COST OF ACQUISITION (COA) the original investment amount is divided into DEMERGED and TARGET Company's Investment Amount. And in case of fractional shares of TARGET Company amount gets credited instead of shares. So I still have confusion if the amount is taxable? If yes whether it is LTCG Tax (10% based on DEMERGED Company's investment more than a year old) or STCG at 15% or as per Income Tax slab rate?
Could you please advise?
I have another query on the same issue. In case of demerger , as per COST OF ACQUISITION (COA) the original investment amount is divided into DEMERGED and TARGET Company's Investment Amount. And in case of fractional shares of TARGET Company amount gets credited instead of shares. So I still have confusion if the amount is taxable? If yes whether it is LTCG Tax (10% based on DEMERGED Company's investment more than a year old) or STCG at 15% or as per Income Tax slab rate?
Could you please advise?
CA R SEETHARAMAN
(Expert)
22 March 2024
It's LTCG as per income tax.
22 March 2024
Thank you Sir for quick response.
Could you please explain the term 'LTCG per Income Tax'?
Does it go through 10% LTCG Tax? Or is it LTCG but goes through tax rate as per Income Slab rates?
Could you please explain the term 'LTCG per Income Tax'?
Does it go through 10% LTCG Tax? Or is it LTCG but goes through tax rate as per Income Slab rates?
CA R SEETHARAMAN
(Expert)
22 March 2024
It's long term capital gains 10% tax applicable.
CA R SEETHARAMAN
(Expert)
22 March 2024
You are welcome...
...
...
Rocks Parss
(Expert)
17 July 2024
Why is it long term or short term? could you elaborate? Is it based on holding period of the original or initial shares?
CA R SEETHARAMAN
(Expert)
18 July 2024
In case of sale of newly allotted fractional share the holding period of that particular share is short hence short term capital gains.
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