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LTCG on shares of a company not listed in India kicks in after 24 months of hold


I had bought shares of an unlisted European firm A in 2018 August. Firm A had share buy settlement with one other firm B in October 2020 and I used to be allotted shares of firm B, which was a listed firm. I need to know if I promote my shares now in August 2021 (3 years after date of preliminary buy), how a lot tax will I’ve to pay in India. I’m an Indian resident. Additionally, I used to be allotted shares of an unlisted firm C (this too is European) in December 2018 as I used to be its founding member. Firm C has gone for IPO in 2021. How a lot tax I’ve to pay if I promote shares in December 2021? 

– Title withheld on request

On the outset, this question includes detailed examination of related information, which aren’t clear from the question. To call a couple of, it is not clear whether or not Firm B is listed in an Indian inventory trade or outdoors India, what was the precise mechanics of trade of shares of Firm A for shares of Firm B, whether or not STT is paid on the time of switch of shares of Firm B and so forth.

Usually talking, if shares of an organization listed on an Indian acknowledged inventory trade are offered the place STT has been paid on the time of acquisition and likewise on the time of sale of such shares and the shares are held for a interval of greater than 12 months, good points arising from such sale of shares is assessed as long-term capital acquire (LTCG), which is taxable at 10%.

In case such shares are held for a interval of lower than 12 months, such short-term capital good points (STCG) from switch of shares shall be subjected to tax at 15%. The tax is additional elevated by relevant surcharge and cess.

If such shares will not be listed on a acknowledged inventory trade in India, above-mentioned concessional charges shall not apply. Interval of holding can be 24 months as an alternative of 12 months for treating such good points as LTCG. On this case, LTCG can be calculated after contemplating the advantage of indexation and can be taxed at 20% (plus relevant surcharge and cess). The place shares are held for a interval lower than 24 months, distinction between sale and buy value shall be taxed at regular slab charges (plus relevant surcharge and cess).

It could be advisable to hunt skilled opinion after offering all vital and related information, to find out tax legal responsibility on this case.

Answered by Shailesh Kumar, Associate, Nangia & Co LLP. Ship your queries to mintmoney@livemint.com

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