Capital Gain

POSTED BY VIJAY ON March 22, 2012 9:01 am COMMENTS (2)

We have purchased 500 shares at very low rate in between 1978-1993. The company is delisted now with price of 4000 each. (Reverse Book Building Process). I want to ask whether LTCG tax is applicable or the amount is TAX-free?

2 replies on this article “Capital Gain”

  1. BanyanFA says:

    Hi Vijay,
    You have raised a very interesting question – often ignored by investors who opt for buybacks offered by the companies. The same gets applicable in your case as well if your delisted company’s share were bought by the company from you outside the stock exchange.

    Income Tax Act is very clear in terms of tax treatment of such capital gains – it is not tax free ! You have two options :
    1. With indexation benefit @ 20% capital gain tax;
    2. Without indexation benefit @ 10% tax.

    Please come back in case you need more clarifications on indexation.

    Regards
    BFA

  2. Dear Vijay, had you paid any STT by surrendering the shares through stock exchanges for the Reverse book building?

    Thanks

    Ashal

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