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The amount received from a liquidator (e.g., due to liquidation of a company like UTI IAS) is treated differently from regular capital gains. Let's break down the tax treatment in your case.
🔹 Case Details:
🔍 Tax Treatment of Amount Received from Liquidator:
Under the Income Tax Act, Section 46(2):
When a shareholder receives any money or assets from a company on its liquidation, the amount received is not taxed as dividend. Instead:
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First, reduce the amount from the cost of acquisition of shares (i.e., what you paid for those 100 shares).
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The balance, if any, is taxable as capital gain (Long-Term or Short-Term depending on the holding period).
✅ Example Calculation:
Let’s assume:
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You bought the 100 shares at ₹200 each → Cost = ₹20,000
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You receive ₹40,000 from the liquidator
Step 1: Deduct cost of acquisition from amount received
Step 2: Nature of Capital Gain
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If shares were held for more than 12 months → Long-Term Capital Gain (LTCG)
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If listed, LTCG above ₹1 lakh is taxable at 10%
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If unlisted, LTCG is taxable at 20% with indexation
If held for 12 months or less → Short-Term Capital Gain (STCG) taxed at normal slab rates
📌 Special Notes:
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UTI IAS is a specific case. If it is an unlisted company, gains would be taxed differently than listed equity.
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Since it’s from liquidation, Section 46(2) specifically applies.
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You cannot claim it as dividend income.
🔖 Summary:
| Item |
Value |
| Amount received |
₹40,000 |
| Cost of shares |
₹20,000 (assumed) |
| Taxable Capital Gain |
₹20,000 |
| Tax Type |
LTCG or STCG depending on holding period |
| Tax Rate |
10%, 20%, or slab rate (based on details) |