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Capital Gains

13 March 2021

Out of sale proceeds of unlisted equity shares during the FY 2019-20, a part was utilised for purchase of a residential house, a second house for the seller of the shares. The remaining sale proceeds attract capital gains tax. Is indexation benefit available for this transaction? What is the rate of tax? Is there any other avenue open for further saving of capital gains tax?

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10 Replies

sabyasachi mukherjee (27721 Points)
Replied 13 March 2021

Indexation benefit is not a available if listed before 21 st jan 2018
rate of tax 20% in excess of Rs.1.00 lakh.

there are various options of saving
1. in house property within a specified time frame.
2. in infrastructure bonds.

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Santhanam K (24 Points)
Replied 13 March 2021

Thank you. The year should be FY 2020-21. I think that does not change the position. The shares are unlisted. Is indexation benefit available?

sabyasachi mukherjee (27721 Points)
Replied 13 March 2021

Year of purchase.

Santhanam K (24 Points)
Replied 13 March 2021

2021.

sabyasachi mukherjee (27721 Points)
Replied 13 March 2021

So the tax rate will vary.
It is short term capital gain.
30% tax rate.
indexation available.

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Kapadia Pravin (17264 Points)
Replied 13 March 2021

Investment in infra bonds under 54EC is not allowed. STCG is 15%

sabyasachi mukherjee (27721 Points)
Replied 13 March 2021

Yes STCG IS 15% IF LISTED ON A RECOGNISED STOCK EXCHANGE BUT THESE SHARES ARE NOT LISTED ON A RECOGNISED ON A RECOGNISED STOCK EXCHANGE.

CMA Poornima Madhava (CMA) (13112 Points)
Replied 13 March 2021

If the house was purchased during FY19-20, when did you buy those equity shares?

Santhanam K (24 Points)
Replied 13 March 2021

A part of the UNLISTED shares were held from 1999 and another part from February 2018. All shares were sold in September 2020. The house was purchased this month. I am afraid clarity was lost in my anxiety to be brief.
I need two clarifications. 1) Whether indexation is available in this case? 2) I believe 54EC benefit is only for immovable property and not for shares. Is there any other investment to save LTCG tax?

CMA Poornima Madhava (CMA) (13112 Points)
Replied 13 March 2021

If unlisted equity shares are held for more than 24 months, capital gain on sale of such assets would be treated as long term capital gain. Since you have held entire shares for >24 months, entire gain is treated as LTCG.

1) Indexation benefit is available in case of long term capital assets

2) yes, 54EC only in case of land and/or building

No further option to invest I think.