Income from sale of unlisted equities to be treated as capital gains: CBDT
PrintListen to this Article
The directive puts to rest the debate over treatment of income from sale of unlisted shares as capital gains or business income. This also gives certainty to foreign investors taking advantage of favourable tax treaties such as India- Mauritius.
The Narendra Modi led NDA government that promised predictability and certainty in the tax policy has already given out a clarification with regard to sale of listed shares.
This circular by the Central Board of Direct Taxes seeks to address industry's concerns over treatment of shares in unlisted companies.
"A welcome move that removes uncertainty in respect of classification of income in case of transfer of shares of an unlisted company, " said Vikas Vasal, tax partner, KPMG in India. The CBDT has said income arising from transfer of unlisted shares would be considered under the head 'Capital Gains', irrespective of period of holding. Quoting February 2016 clarification on income characterization for listed shares wherein 12-months threshold has been specified to treat income as capital gains and not business income, the CBDT said for determining the tax-treatment of income arising from transfer of unlisted shares for which no formal market exists for trading, a need has been felt to have a consistent view in assessments pertaining to such income. In many cases assessing officers were treating such gains as income, leading to disputes.
"Categorizing of gains derived from sale of unlisted shares (especially in cases where the transfer was without transfer of control and management of underlying business), as business income, by tax officers was devoid of merit which the CBDT has rightly ordered to set right by classifying it as capital gains irrespective of the holding period," said Amit Maheshwari, Partner, Ashok Maheshwary & Associates.
"These shares having no ready market as such and can under no stretch of imagination be viewed to be held for trading," added Maheshwari.
However, three exceptions have been carved out where this clarification shall not apply. These would include situations in which genuineness of transactions in unlisted shares itself is questionable, transfer of unlisted shares is related to an issue pertaining to lifting of corporate veil and transfer of unlisted shares along with the control and management of underlying business. In these situations assessing officers would take appropriate view, the CBDT has said #casansaar (Economic Times)
Category : Income Tax | Comments : 0 | Hits : 636
If you earn income other than salary or have multiple income streams, the advance tax deadline falling today—Monday, December 15, 2025—should not be overlooked. Failure to pay advance tax on time, or paying less than the required amount, may attract interest charges that continue to accumulate. As the Income Tax Act operates on a “pay as you earn” basis, being aware of advance tax provisions and the financial impact of delays can help you avoid unnecessary costs and last-...
If you earn income other than salary or have multiple income streams, the advance tax deadline falling today—Monday, December 15, 2025—should not be overlooked. Failure to pay advance tax on time, or paying less than the required amount, may attract interest charges that continue to accumulate. As the Income Tax Act operates on a “pay as you earn” basis, being aware of advance tax provisions and the financial impact of delays can help you avoid unnecessary costs and last-...
As many as 5,44,205 appeals were pending resolution with the Income Tax (IT) Department at commissioner (appeals) level as of January 31 this year, and 63,246 at various Income Tax Appellate Tribunals (ITATs), High Courts, and the Supreme Court, FE has learnt. To be precise, the cases pending in ITATs were 20,266 High Courts, 37,436; and Supreme Court 5,544. The large pendency is even as the Central Board of Direct Taxes (CBDT) has laid emphasis on disposing of income tax appeals in its 10...
The Central Board of Direct Taxes (CBDT) has facilitated taxpayers to file their Income Tax Returns (ITRs) for the Assessment Year 2024-25 (relevant to Financial Year 2023-24) from 1st April, 2024 onwards. The ITR functionalities i.e. ITR-1, ITR-2 and ITR-4, commonly used by taxpayers are available on the e-filing portal from 1st April, 2024 onwards for taxpayers to file their Returns. Companies will also be able to file their ITRs through ITR-6 from April 1 onwards. As ...
It has come to notice that misleading information related to new tax regime is being spread on some social media platforms. It is therefore clarified that the new regime under section 115BAC(1A) was introduced in the Finance Act 2023 which was as under as compared to the existing old regime (without exemptions): New Regime 115BAC (1A) introduced for FY 2023-24 Existing old Regime 0-3 lacs 0% 0-2.5 lacs 0% ...
Comments