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Tax on the gains earned by selling the un-listed shares

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Srinivas

Others

22 Points Posted on 20 August 2013

Hi Experts,

Please clarify my query:

Person-X(Resident of India) purchased the shares of his company-A which is not listed anywhere.

And recently Company-B acquired the COmpany-A, and Person-X sold his shares and got the amount from USA.

The query is, amount which Person-X gained by selling the shares(which are not listed) is taxable?

If it is taxable is there any way of re-investing and saving the tax?

Regards

Srinivas

Replies (1)

CA Simarpreet Singh Gulati

Chartered Accountant

459 Points Posted on 20 August 2013

The gain on sale of shares of Company A earned by Person X is taxable in India. If the shares are held for a period less than 1 year, short term capital gain shall be chargeable to tax based on the slab rate of Person X. If the shares are held for a period more than 1 year, long term capital gain shall be chargeable to tax at 20% of the capital gain after applying indexation or 10% of the capital gain without indexation, whichever is less.

The tax on the capital gain can be avoided by investing the gain amount in specified bonds issued by NHAI or RECI under section 54EC of the Income Tax Act or investing the entire net sale consideration in residential property under section 54F of the Income Tax Act.

Hope this clarifies your doubt.