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Tax Treatement

This query is : Resolved 

07 July 2010 What is tax treatment of amount received for
fractional shares which are received in case of merger?

07 July 2010 Technically it should be capital gains as you received amount on sale of fractional sales. The amount received less the cost of acquisition of fractional shares should be treated as capital gains.

However in realty everyone treats it as income from other sources only deducting the cost of fraction shares.

09 July 2010 But in case of amount received for fractional shares no any transfer/sale take place. How it can be a capital gain?

Suppose i have 1000 shares of A Ltd. B ltd. takes over A Ltd. Exchange ratio is 1:16,
sale price of share is Rs. 2000.

So i got 62 shares of B Ltd and for 0.5 franctional propotion cheque of Rs. 1000 (Rs. 2000*0.5). So what will be the tax treatement for Rs. 1000.


09 July 2010 Further clarify with the details of cost of acquisition.

09 July 2010 Rs. 1000 - Cost of acquistion of the 8 shares will be income from sale of fraction taxable under income from other sources.



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