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Let's say I get 50,000 equity shares of an unlisted company (not listed on the stock exchange for trading).
Moreover, I get them at ZERO consideration. What I mean is that I pay no price to buy the shares. The person who holds the shares transfers it to my name totally free of cost.
Will I be taxed when it is given to me?
Now let's say the shares get listed later. I sell these shares after a year and get Rs 10,00,000.
Will in be taxed in this case?
- Sunil Gokhale
We assume you have been gifted the 50,000 equity shares which are of an unlisted company. We can visualise two scenarios considering the above situation:
1. If this gift is received from a specified relative, then it would not be subject to tax. So, when you get the shares, you will not be taxed on them.
2. Now, let's say you get these shares from a non-relative. Then, the value of this gift would be taxed in your hands.
Let's talk of selling the shares.
As you know, there are various heads of income:
1. Salary
2. Income from house property
3. Capital gains
4. Profits and gains from business or profession
5. Income from other sources
When you sell your shares, they would be taxable under the head 'Capital Gains'.
When calculating capital gains, the cost at which you buy the shares is taken into account. However, in this scenario, the cost incurred by the person gifting the shares to you would be treated as the original cost of acquisition.
So, the buying cost of the person who is gifting you the shares will be used to calculate capital gains.
To see the other query answered, read Not getting your full HRA?
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