Kumar (Others) 09 July 2019
There were a few shares acquired around 1980s for which we've no record of the actual price at which we acquired it.
We've sold these shares now. In order to pay LTCG tax, clearly, its the FMV to sale price that will be effective. However, what would we report as our actual cost of acquisition - any suggestions?
We were thinking to declare cost of actual acquisition as 0. This is for ITR-2.
Krishna Chaudhary (Accountant) 09 July 2019
concept of grandfathering will apply here-
A method of determining the Cost of Acquisition (“COA”) of such investments has been specifically laid down according to which the COA of such investments shall be deemed to be the higher of-
The actual COA of such investments; and
The lower of-
Fair Market Value (‘FMV’) of such investments; and
the Full Value of Considerationreceived or accruing as a result of the transfer of the capital asset i.e. the Sale Price
Further, the FMV would be the highest price quoted on the recognized stock exchange on 31 January 2018. In case there is no trading of the said asset in such stock exchange, the highest price on a day immediately preceding 31st January 2018 shall be considered to be the FMV. In effect, the taxpayer can claim the highest price quoted on the recognized stock exchange on 31 January 2018 as the COA and claim the deduction for the same.
The computation mechanism has been further explained by way of the following examples
Capital Gain/ Loss = Sale Price – Revised Cost of Acquisition on 31.1.2018
Mr X bought equity shares on 15/Dec/2016 for Rs. 10,000. FMV of the shares was Rs. 12,000 as on 31/Jan/18. He sold the shares on 10/May/2018 for Rs. 15,000. What will be the long-term capital gain/ loss?
Cost of Acquisition (COA)
Higher of –
Original COA i.e. Rs. 10,000, and
Lower of –
FMV on 31.1.18 i.e. Rs. 12,000, and
Sale Price i.e. Rs. 15,000
Hence, COA = Higher of (Rs. 10,000 or Rs. 12,000) = Rs. 12,000
Capital Gain/ (Loss)
Sale Price – Cost of Acquisition
Rs. 15,000 – Rs. 12,000
In case any doubt, you can ask.
Kumar (Others) 11 July 2019
|Originally posted by : sujithavasa|
|cost of acquisition can be FMV as on date of purchase|
Thank you for your reply. Unfortunately we don't know the exact date of purchase or year. Just know that it was purchased somwhere in the 80s/early 90s. Given this any suggestions on what can we specify as the actual acquisition cost?
Kumar (Others) 11 July 2019
|Originally posted by : Jaykishan Chaudhary|
|concept of grandfathering will apply here-A method of determining the Cost of Acquisition (“COA”) of such investments has been specifically laid down|
Thanks for your reply. However, this was not the question. I'm aware of the grandfathering clause and how to compute. As indicated in my original question:
"In order to pay LTCG tax, clearly, its the FMV to sale price that will be effective."
Just to restate the question clearly: I do know the amount of tax I'm liable to pay, the FMV as on 31-Jan-2018 will apply and I've computed what I need to pay. However as a matter of reporting, I do need to specify in the ITR my original cost of purchase as well. Given that I don't know the original cost of purchase, I'm seeking guidance/suggestion here.