What are the tax implications of unlisted shares?
Question: I am an individual taxpayer and have sold off certain unlisted shares in my portfolio. Kindly guide me on the tax implications on the gains derived from such transfer.
Answer by Dr Suresh Surana, Founder, RSM India: Gains from unlisted shares would be required to be categorized as long term or short term based on their period of holding.
Accordingly, the gains would be categorized as long term in nature only if the period of holding of such shares is more than 2 years, otherwise such gains would be categorized as short term.
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Such short-term capital gains on unlisted shares would be taxed in accordance with the applicable marginal rate of the investor. On the other hand, the long-term capital gains are taxed at 20% u/s 112 of the Income Tax Act in the hands of the resident taxpayers and eligible to claim the benefit of indexation on such long-term capital gains.
Further, such taxpayers need to report in their applicable Income Tax Return (ITR) details of any transfer of such unlisted shares during the year (refer extract of ITR-2 for reference purposes).
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