I have purchased shares of an unlisted companies in 2012 @ INR 10 each. I have sold the shares on 1…
I have purchased shares of an unlisted companies in 2012 @ INR 10 each. I have sold the shares on 15th Apr 2018 which was the FMV certified by a merchant banker. The company is still unlisted.
I want to know the following:
- What would be the cost of acquisition, whether it will be INR 10 Indexed or i can take FMV as at 31st January 2018 as the cost of acquisition.
- What would be rate of tax, whether i have the option to choose 10% ( without indexation) or 20% ( with Indexation).
Hello Manjeet,
1. Please use Rs 14* per share as cost of acquisition. It is Indexed Cost of Acquisition of the Asset calculated on Rs 10.
2. You should pay LTCG tax @ 20% on the gain that you make (Gain = sale price - indexed cost of acquistion)
The “option to choose” between 10% without indexation or 20% with indexation tax is available to listed companies only. Your being share of an unlisted company you don’t really have a choice.
For further insight on this matter, you can refer to section 55(2)(ac) of the Income Tax Act, 1961.
*assuming you purchased the shares in 2012-13. If you purchased it in 2011-12, Indexed Cost of Acquisition would be Rs. 15.21 per share.
