Simplifying Tax for C.A's and Taxpayers
Are you dealing in shares? Are you aware of latest amendment by finance act, 2016 in this respect?

Are you dealing in shares? Are you aware of latest amendment by finance act, 2016 in this respect?

If you are the person who also holds the shares of those companies which are not listed on a recognized stock exchange, than for your information period of holding for the purpose of determination of short term or long term capital asset has been reduced to 24 months in case of investment in unlisted shares of a company.

W.E.F. A.Y.2017-2018, section 2(42A) of the Income tax act, 1961 which provides for the definition of short term capital asset, has been amended to reduce the period of holding to 24 months instead of 36 months in case of share of company not being a share listed in a recognized stock exchange in India.

And as such, if a person holding shares of unlisted company, while selling them, has to compute capital gain for the purpose of the income tax act, 1961 as to whether it’s being a short term capital gain or a long term capital gain as to remember the new period of holding.

And to the surprise, finance act, 2016 has changed the period of holding in case of unlisted shares. If a person sells unlisted shares of the company after holding the same for a period for more than 24 months (earlier it was 36 months) than the gain arising on such shares will be taxed as long term capital gain.

On the Contrary, If a person sells unlisted shares of the company after holding the same for a period less than or equal to 24 months (earlier it was 36 months) than the gain arising on such shares will be taxed as short term capital gain.

To help in remembering the period of holding for the purpose of determining the nature of capital asset, following table be referred to:

A. For Long term capital assets:

T1

B. For short term capital assets:

T2

Share

Leave a Reply