I had purchased share of a private limited company (Unlisted Equity Shares) on 01.02.2010 and sold them on 01.05.2011. I just want to know that the profit from the sale of such shares is Long Term or Short Term. Also, if it is LTCG, then the indexation is allowed on such shares or not.
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Income from capital gains
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Off course gain will be long termand will be liable to capital gains tax @ c 10%. When a asset qualify as a long term asset the indexation benefit is available.
Shares qualify as long term asset if the same were held as invst for more than 1 year.
Hi,
The gain arising from the sale of shares is Long Term as you have held ur shares for more than 1 year. Cause as per section 2(42A) incase of share and debentures if they are held for not more than 12 months they shall be termed as short term. ANd more than that as Long term. So in ur case the gain arising is long term.
Now since its long term u can claim the indexation benefit for ur purchase cost of shares. However no deduction under Chapter VIA shall be allowed against the LTCG.
And the gain arising shall be taxable @ 20% and not 10%. The 10% rate is available only for Listed securities and not unlisted.
Now there is a special benefit available to HUF and Individuals. That is if ur total income excluding the Long Term Capital Gain is less than the Basic Exemption Limit ie 200000 the LTCG shall be taxed as follows.
20% of [Total Income including LTCG- Basic Exemption LImit]. + Cess @ 3%.
Which means that u shall be taxed at a lesser rate.
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