Transfer of shares of an unlisted from one sharesholder to another

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12 Points Joined August 2021

When an unlisted share gets transferred from one person to another in India, can the amount in consideration of the transfer be paid after the date of actual transfer, or to be considered as a transfer payment a key requirement?

 

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On 03 February 2025 at 19:47 Report
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Master in Accounts & high court Advocate
8778 Points Joined December 2011

In India, when an unlisted share is transferred from one person to another, the payment for the transfer can be made after the date of actual transfer.

 However, there are certain key requirements that need to be fulfilled:

 Key Requirements 1. *Share Transfer Agreement*: A share transfer agreement should be executed between the transferor and the transferee, specifying the terms and conditions of the transfer, including the payment details.

2. *Share Transfer Form*: A share transfer form (SH-4) should be filled and signed by both parties, which includes details of the transfer, including the date of transfer and the consideration amount.

3. *Stamp Duty*: The share transfer agreement and the share transfer form should be stamped as per the Indian Stamp Act, 1899.

4. *Payment*: The payment for the transfer can be made after the date of actual transfer, but it should be made within a reasonable time frame.

Important Considerations 1. *Section 56(2)(x)*: If the payment is not made within a reasonable time frame, the transferor may be liable to pay tax on the difference between the fair market value of the shares and the consideration received, under Section 56(2)(x) of the Income-tax Act, 1961.

2. *Capital Gains Tax*: The transferor may be liable to pay capital gains tax on the transfer of shares, if the transfer results in a capital gain. Conclusion In conclusion, while the payment for the transfer of

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On 07 February 2025 at 13:01


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