CAPITAL GAIN REG

The taxpayer should split the taxation into two parts:

1. Principal (Rs. 10/share): Claim as Short-Term Capital Gain (STCG) since the cost of acquisition is Nil and the holding period is less than the required long-term threshold.

2. 6% Interest/Dividend: Claim as Income from Other Sources (IFOS), taxable at normal slab rates.

The split treatment is correct. Here is the exact ITR mapping to use.

PREFERENCE SHARE REDEMPTION PRINCIPAL (Rs 10/share x 4,000 = Rs 40,000):
This is a capital gains event. Cost of acquisition = NIL (received at no cost). Holding period: from August 2025 to redemption date. Since that is under 12 months for listed shares, it qualifies as SHORT-TERM CAPITAL GAINS.

Rate: 20% under new rules for listed equity shares held under 12 months (Section 111A). Report in ITR-2, Schedule CG, Table B2 (Short-Term Gains - listed shares).

If the shares are UNLISTED preference shares (not trading on BSE or NSE), the rate is as per your income tax slab (normal STCG treatment). In that case, report in Schedule CG, Table D (Other Short-Term Gains).

6% INTEREST COMPONENT:
This is income from other sources, not capital gains. Report in ITR-2, Schedule OS at applicable slab rate.

PRACTICAL NOTE: The company should have deducted TDS under Section 194 on the interest portion if it exceeds Rs 5,000 in the FY. Check your AIS for any TDS entry from TVS Motor before filing. If TDS was deducted, ensure you claim it correctly in Schedule TDS2.

This [capital gains tax guide for listed shares - STCG/LTCG AY 2026-27](https://taxgarden.in/blog/income-tax-on-sale-of-listed-shares-stcg-ltcg-india-ay-2026-27) covers the holding period rules and NIL cost of acquisition scenarios.