A short term gain accrued to us on off market buy back of our shares by a company on delisting. However, since the transaction is off market on which no tax (STT) is paid, does this qualify for regular Short Term Capital Gains on shares? Or, will it fall under LTCG (Other assests to which option under proviso to section 112(1) exercised) ? Please advise. Thank you.
2 Replies
Devendra
(Chartered Accountant)
(4775 Points)
Replied 10 May 2013
If the sale is within one year, then Short Term Capital Gains shall attract, if beyond one year, then Long Term Capital Gains shall apply.
Regards,
Devendra Kulkarni
Curious
(Owner)
(95 Points)
Replied 11 May 2013
Thank you Devendra. But please note that delisting of shares is special case and no STT is paid to gov. since it is an off market transfer. There is no LTCG on shares. But in delisting of shares even if the transaction is long term it is amenable to tax. In this case the transaction is short term. So even if regular STCG tax is paid, as you said, the gov. loses out on STT. This is difficult to accept. Pl explain. Thank you.
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