Saturday, July 12, 2014

Capital gain tax for unlisted shares source business line

Finance  Minister  budget  announcement  provides  that    capital  gain  tax  for  unlisted  shares.  Normally  capital  gain  tax will  be available only  for  Listed  shares.  

This  move  significantly  affect  investors  and  shareholders  of  Private  limited  companies  and  also  private  equity  holders.

Budget 2014-15 proposes to provide that an unlisted share will be considered as “short term capital asset” if held for not more than 36 months.  

This  is  sharp  contract  to  short term  capital gain  tax to  36  months  from  the  present  12  months  period.

Tax  experts  feels  that  the  move  of  36  months  is  unwarranted.

The  move  will create  private  equity  funding  in unlisted  shares as  they wanted  flexibility  to exit   

An important fallout of the latest proposal could be that foreign private equity investors pumping money into India could start looking at post-tax returns.

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