Tax on xsfer of shares of pvt. ltd. company

In this case he will have to pay according to his marginal rate of tax . In case his is under 30% slab rate, he will have to pay tax @ 30%. The benefits of indexation  is not allowed.

Dear Ankita,

Can't the tax be saved under Section 54F, i.e if a new residential property be purchased by him 1 year before the transfer of shares or 2 year after the xsfer?

Yes . In case the gain from sale of shares was long term , exemption can be claimed u/s 54F.

I think if the capital asset which is transferred is equity shares and the transaction is subject to securities transaction tax, then the long-term capital gain is not chargeable to tax.

But in other cases, tax shall be computed as follows:

1. From the sale consideration deduct Indexed Cost of acquisition/improvement. The balancing amount is long term capital gain and 20 % is the tax liability.

2. In option 2, Cost of acquisition /improvement will be deducted from Sale Consideration without the benefit of indexation. Balancing amt wil be long term capital gain. 10% will be tax liability.

I think in the above case, benefit of indexation can be taken.