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Long term capital gains ay 2019-20

SHAHNH (Professional) (162 Points)

07 July 2018

How does the grand fathering equation apply in order to ascertain ones profit or loss in case of long term capital gain / loss and what are the timelines for AY 2019-20. Also advice as to which cost to be taken for shares bought before 10 years and also the cost to be taken in case of Bonus shares. Thanks

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (166282 Points)
Replied 07 July 2018

The cost of acquisitions of a listed equity share acquired by the taxpayer before February 1, 2018, shall be deemed to be the higher of following:

a) The actual cost of acquisition of such asset; or

b) Lower of following:

(i) Fair market value of such shares as on January 31, 2018; or

(ii) Actual sales consideration accruing on its transfer.

The Fair market value of listed equity share shall mean its highest price quoted on the stock exchange as on January 31, 2018. However, if there is no trading in such shares on January 31, 2018, the highest price of such share on a date immediately preceding January 31, 2018 on which trading happens in that share shall be deemed as its fair market value.

In a case where the capital asset is an equity share in a company which is not listed on a recognised stock exchange as on 31 - 1-2018 but listed on the date of transfer, the cost of unlisted shares as increased by cost inflation index for the financial year 2017 -18 shall be deemed to be its FMV.

The scenarios below detail how long term capital gains will be calculated for sales on or after 1st April, 2018. In each of these scenarios, a certain asset is purchased on 1st January 2017 and sold on 1stApril 2018. The Long Term Capital Gain calculation for this asset is now computed by determining what the Cost of Acquisition is for the asset, by comparing the values for Purchase Price (PP), Fair Market Value on 31st January 2018 (FMV) and Sale Price (SP):

Scenario	Scenario Descripttion	Purchase Price as on 01-Jan-2017 (PP)	Fair Market Value as on 31-Jan-2018 (FMV)	Sale Price as on 01-Apr-2018 (SP)	Cost Price for Capital Gains Calculation	Long Term Capital Gain
1	PP < FMV < SP	100	200	250	200	50
2	PP < SP < FMV	100	200	150	150	0
3	FMV < PP < SP	100	50	150	100	50
4	SP < PP < FMV	100	200	50	100	-50
5	SP < FMV < PP	100	50	25	100	-75
6	FMV < SP < PP	100	50	75	100	-25
7	Bonus: PP = 0, FMV < SP	0	200	250	200	50
8	Bonus: PP = 0, SP < FMV	0	200	150	150	0

More refer: what-is-grandfather-clause-how-it-helps

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dilip (Propritor) (72 Points)
Replied 26 October 2018

what if unlisted shares are acquired in year 1992 and sold on 30.11.2018 how will be indexation be done and how tax will be calculated.

what if shares were listed in 1992 and later it was delisted in year 2000 in such case what will be taxation if sold in year 2018

can we setoff losses of LTCG of listed company with unlisted shares

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (166282 Points)
Replied 26 October 2018

@ dilip........ whether the shares sold on exchange (in 2018) with STT paid?

If yes.......

Indexed cost of aquisition as on 31.3.2018 will be taken as cost of aquisition, and sec. 112A will apply. (in both situation)

Yes, loss of LTCL of listed com. is allowed to be set off with other LTCG/s and and any additional loss can be carried forward to next 8 years for adjustment against LTCG/s.

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Jayant Bhatt (2 Points)
Replied 23 January 2019

Thanks for very useful topic. Please guide me on the following for tax calculations.

I had purchased 100 shares of an unlisted company in the year 1990. This internal transaction was in the physical form and through transfer deed. Subsequently, received 300 bonus shares in Oct-2016.

My purchase cost of 100 shares was Rs. 10,000/-

Ultimately, shares of this company was listed on BSE in February-2018 and I sold 400 shares in August-2018 and received amount of Rs. 2,40,000/-

How to calculate capital gain?

Please guide me.

Thanks in advance.