long term Capital Gain on Unlisted shares

Friend,

The two method for computing LTCG on Shares with and without indexation is stated in provisio to section 112 of IT Act requires following;

Section 112

Provided

that where the tax payable in respect of any income arising from the transfer of a long-term capital asset, being listed securities ¹⁰[or unit] ¹¹[or zero coupon bond], exceeds ten per cent of the amount of capital gains before giving effect to the provisions of the second proviso to section 48, then, such excess shall be ignored for the purpose of computing the tax payable by the assessee.

In view of above, transfer of shares of an unlisted company shall not have benifit of the above provisio and shall be taxed @  20% rate.

Thanks and Regards

Juzer Sadikot

LTCG on listed shares is already exemted so why two method for calculation

Bro

LTCG on Listed Share sold in Recongnised Stock Exchange and STT is charged on sale of such shares are expemted u/s 10(38).

Now take an example of sale under buyback of listed Shares.

Thanks

Its again very simple...

Option 1 : With indexation - tax rate is 20%

Option 2 : Without Indexation - tax rate is 10%.. here directly 4m sale consideration deduct the cost of acquisition n the balance shall b LTCG which will b taxable @ 10%....

NOTE :

Here the option is given to the assesee to select the option whichever is benifcial to asseessee....

Friend,

Technically speaking no option, its always lower of following;

20% with Indexation or

10% with out Indexation

Correct me if I am wrong.

Thanks

Dear Md. Raza,

your question was on unlisted securities, now total analysis became on listed securities.

way of without indexan shown by Megha Shah is just appropriate. First calculate capital consideration recd. less cost of acquisation without index benifit = LTCG

again Mr.Zazir what sais - minimum is also absolutely correct, but that is for LTCG on Listed Shares & Securities

Thanks for reply..............

While going through my note book I found that two option are available only in case of Listed shares which are sold without paying STT or sold through a stock exchange which are not recogniesd...............for unlisted shares only 1 option

Am I right?

The unlisted shares capital gain is computed in the normal manner and indexation is available for the same. The Options r available only for listed shares and not unlisted shares. The period of holding for unlisted shares & debentures r same as for normal assets like house and other tangible assets. Now the answer of ur 2nd question, why two metheds of  calculation for the listed shares which r long term. Because the gain is taxable at 10% if computed without indexation and it will be taxable at 20% if computed with indexation. The exemption is available u/s 10(38) only if shares r sold though stock exchange and securities transaction tax is paid otherwise not exemption is available.  U r right.

Dear Members,

For LTCG in case of Capital Asset being shares of listed Company (Listed Shares) the Assessee doesnt have any "option".

Its always lower of two (refer my previous post)

Further the use of word Option in computatation of Capital Gains on Listed Shares can create big drama/blunder.

Thanks

Thanks Juzer.....

Thanks to Pammi,Debashish and Megha also

Reply posted by Juzer is perfect.

Yes sir. Agreed with everyone.

@ Aspring

Thanks.

From the discussion listed above what I understand is 

unlisted shares when sold beyond the stipulated  holding period of 36 months shall attract LTCG tax 

@ 10% with indexation and 20% without indexation whicever is lower in terms of amount. Am I correct?

Short Term Capital Gains on unlisted securities are charged capital gains tax @ 30% and 40% in case of Non residents. Is it correct?