Income Tax on Unlisted Shares
A Stock that is not listed on a recognized stock exchange is an unlisted stock. A trader buying and selling unlisted stocks must file ITR and pay tax on the income earned. The sale of Unlisted Shares is a Capital Gains Income as per the Income Tax Act.
Capital Gains on Sale of Unlisted Shares
- Long Term Capital Gain (LTCG): If one sells an unlisted stock held for more than 24 months, gain or loss on such sales is a Long Term Capital Gain (LTCG) or Long Term Capital Loss (LTCL).
- Short Term Capital Gain (STCG): If one sells an unlisted stock held for up to 24 months, gain or loss on such sale is a Short Term Capital Gain (STCG) or Short Term Capital Loss (STCL).
Income Tax on Unlisted Shares
The following are the income tax rates on the sale of unlisted shares of a Domestic Company or Foreign Company.
- Long Term Capital Gain — 20% with Indexation
- Short Term Capital Gain — taxed as per slab rates
Tax on IPO
The tax treatment on the sale of such shares is the same as in the case of listed shares as follows:
- Long Term Capital Gain — taxed at 10% in excess of INR 1 lac under Section 112A
- Short Term Capital Gain — taxed at 15% under Sec 111A
Read more about ITR Form, Due Date and Tax Audit Applicability for Unlisted Shares.
As the tax filing season is coming soon, calculate your Tax Liability under both regimes and find out which is more beneficial for you.
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