Govt to extend indexation benefit share sale of unlisted companies

INDORE, India - March 15, 2018 - PRLog -- Giving sooth to the investors, the govt on 14-March 2018, extended indexation benefit for those keeping unlisted shares in startups and other firms, letting the benefit of inflation indexation while computing the long term capital gains (LTCG) tax on shares that were unlisted as on January 31, 2018.

Presently, 15% tax is levied on short-term capital gains made from sale of listed equity shares. However, long term capital gains tax is nil for such shares sold after a one year of purchase.

Long term capital gains on sale of unlisted shares is taxed at 20%, while in case of short term capital gains it is 30%.

Many representations have been made to ministry for elimination of 10% tax on long-term capital gains exceeding Rs 1.00 lakh from sale of listed equity shares. Shareholders were hoping certain relief in form of postponement of this proposed tax or increase in threshold limit of rupees one Lakh.

The stock market had a negative impact, on account of taxation of long-term capital gains beyond Rs 1.00 lakh from sale of listed equity shares.

This step of govt to extend indexation benefit to sale of share of unlisted companies will enable the indexation benefit to shares which were unlisted as on January 31, 2018, but were listed on the date of transfer – that is on first April 2018 or afterwards.

The amendment seeks to give that the fair market value of shares which are not listed on January 31, 2018, but listed on date of transfer shall be indexed according to  cost of acquisition.

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