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Transfer of listed shares at less than market value

amit kumar agrawal (Article Trainee) (48 Points)

21 January 2015

Is there any restriction on transfer of shares of a Listed Companyat a Price less than Market Value ?

What will be the tax liability in the hands of transferor or transferee ?

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1 Replies

Shivam gupta (student) (263 Points)
Replied 29 January 2015

IN hands of transferor

if any listed share is transfered at stock exchange(it means share are sold at market value i.e. pricerat which it is traded on stock exchange), and on such transaction STT is paid then :

=> cap gain shall be exempt u/s 10(38) if such security has been held for a period more than 1 yr.

=> cap gain shall be taxable at flat rate of 15 %, if security is held for a period less than 1 yr.

if listed shares can be traded on stock exchange then its ok, taxability will be same as above.

but if shares are traded outside the stock exchange then normal tax rate as applicable on the assessee shall apply.

In the hands of transfree

if shares are sold at a price less than its market value, the provisions of section 56(2)(vii) shall get attracted.If the difference between sale price and market price is more than 50000 then the difference shall be taxable in hands of transfree(taxable amt=sale price-mkt value.)