Please make clear tips on how to declare capital loss on shares of delisted firms. Please let me know the procedures, and for what number of years that may be carried ahead as per revenue tax rule. Hope you can be ready to clear my doubt and allow me to get better my losses as per revenue tax rule in opposition to future capital features.
As per the revenue tax legal guidelines one earns capital features or incurs capital loss solely when the capital asset is transferred. The revenue tax act defines the time period “switch” to incorporate extinguishment of the rights within the asset along with precise switch of the asset. I presume that the shares you’re speaking about have solely been delisted and are nonetheless in existence.
As soon as the shares get delisted, it turns into nearly unimaginable to promote them except the Firm affords any exit route so successfully the funding turns into irrecoverable and is precise loss for the taxpayer however we can not declare that loss because the shares have neither been extinguished nor transferred by you. In case the corporate has gone into liquidation or the corporate has been referred to NCLT beneath IBC and the NCLT has authorised the corporate to extinguish the shares, you may declare the loss. Whether or not the shares have been extinguished or not you may confirm it out of your demat assertion.
If the identical have been extinguished as nicely, you may apply the indexation in your authentic value and declare the entire listed value as brief time period or lengthy time period relying on the holding interval. Such loss may be carried ahead for eight years if the identical can’t be adjusted through the present 12 months.
Balwant Jain is a tax and funding knowledgeable and may be reached at email@example.com and @jainbalwant on Twitter
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