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amalgamation

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(Querist)
12 December 2009 what is the tax effect on the transaction if a public company holding 100%share of a private company has sold the above share to the other private company
is this transaction is liable to tax or not?if yes then how
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Barun Kumar Ghosh

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Barun Kumar Ghosh (Expert)
12 December 2009 Shares held by the public company in private limited company constitute capital assets of the public company. On sale of such shares, if any profit arises to the public company, such profit is chargeable to tax under the head "capital gains" in the year in which the sale takes place. If the shares are held for more than 12 months by the public company before sale, then such profit will be long-term capital gain and indexation benefit will be available. The rate of tax is 20% + applicable surcharge + applicable education cess
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