mr. A purchased 500 shares @ rs20 in physical form of xyz ltd on 01.09.2008.......
he dematerialised these shares and the shares were credied in 20.09.10 in his demate a/c,,
on 22.11.2010 he sold these shares @ rs 320......now what will be the tax consequences ...whether it is a long term or short term gain.......pls guide....
period of holding will be counted from the date when these shares were first held by the assessee,in ur case 01/09/2008...
In respect of shares the criteria to make the transfer a long-term is 1 year unlike the 3 years for usual transfers. Hence, the above transaction has to be treated as a long- term capital gain and taxed accordingly by indexing the cost as per the CII of F.Y. 2008-2009 and taxing @ flat rate of 20%.
It is a long term capital gain and if STT (Securities Trasaction Tax) is paid on the same, then there will be no Capital Gain Tax as such gain is exempt u/s 10(38) of the Income Tax Act.
Regards,
Devendra K
Also, if STT is paid on these shares it will be exepmted from tax.
Capital gain treated as Long term in nature...because period will be calculated from the shares first purchase by the buyer i.e from 1.09.2008..
i think the acquisition date shall be taken as when the shares are credited in the demate a/c.....i think so...perhaps i read this anywhere.....thas y i am not sure .....
the conversion of shares from physical form to demat is only a mechanism, the purchase date shall be counted when the shares are originally held in physical form, and shall be taxed accordingly...
agreee with mr devendra
Pls refer CBDT Circular 704 of 1995. Period of Holding shall be taken from the date of original acquisition of physial shares and not date of demat account.
If TT has been paid then its LTCG+STT= Exempt u/s 10(38)
Exempt U/s10(38) if STT is paid on the shares sold
@ laxman the point u r talking about is when there are share are dematerialised in diff lots not all together.
in that case it was cleared by CBDT that FIFO method would b usd to find out the shares u sold were out of physical stock or demat shares.
the period of holding concept would remain the same here also, dt of acquisition.
Its definitely long term in nature... The question of dematerialisation is important when you dematerialize the scriptt on different dates... Its Long Term in Nature and it will be exempt provided STT has been paid on the same......
definitely right mr shanil.....the gain is long term ...thanx to all friends and seniors
CAclubindia
