Cost of acquisition of unlisted shares

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PRAMOD KUMAR (Querist)
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01 August 2014 Dear experts,
Mr. X was offered in FY 2010-11 ESOPS of 100 Shares of unlisted company valued by them @ 1000/=.
The company has deducted TDS @30%.
Mr. X has sold these shares in 2013-14 FY for
200000/- to Mr.Y in a private transaction as shares are unlisted.
My queries are:
1. What will be the cost of acquisition - 1000/- per share or 700/- per share?
2. What will be the capital gains?
3. Will indexation can be done for the same?
What rate is it to be taxed?

Prof. Bajaj

Prof. Bajaj (Expert)
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02 August 2014 In my opinion.

1. The cost of acquisition would be Rs. 1,000 per share.

2. You can use 10% without indexation and 20% with indexation to compute capital gain tax liability.

3. Answered above.

PRAMOD KUMAR

PRAMOD KUMAR (Querist)
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02 August 2014 Dear Sir,
Will section 112 provisions are not applicable?

Prof. Bajaj

Prof. Bajaj (Expert)
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03 August 2014 The above advice is as per Sec 112 (1)(a).

PRAMOD KUMAR

PRAMOD KUMAR (Querist)
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03 August 2014 Dear Mr. Bajaj,
Section 112 (1) (iii) says that gains on unlisted shares after 01.04.2012 will be taxed @ 10% and no indexation will be allowed.
The newly added tax relief provision u/s 112 as per Finance Act 2012 is as under :
In section 112 of the Income-tax Act, in sub-section (1), with effect from the 1st day
of April, 2013,—
(A) in clause (c), for sub-clause (ii), the following sub-clauses shall be substituted,
namely:—
“(ii) the amount of income-tax calculated on long-term capital gains [except where
such gain arises from transfer of capital asset referred to in sub-clause (iii)] at the
rate of twenty per cent; and
(iii) the amount of income-tax on long-term capital gains arising from the
transfer of a capital asset, being unlisted securities, calculated at the rate of
ten per cent on the capital gains in respect of such asset as computed
without giving effect to the first and second proviso to section 48.”;

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