1. cost of acquisition in the hands of A or book value whichever is higher.
2. 20%
3. Yes
Capital gains from sale of unlisted shares of a foreign company
-A & B are not relatives as per IT definition -A holds shares of foreign unlisted company since many years (long term) -A gifts these shares to B without receiving any consideration -B sells these shares received from A in same FY in which the gift was received -Q1: What will be the cost of acquisition for B? FMV or book value or ..... ? -Q2: At what rate will be the gains accrued by B taxed? -Q3: Will the capital gain accrued by B included in the limit for calculating surcharge on B's total income for the particular FY e.g.10% of Income tax where total income exceeds Rs.50 lakh, 15% of Income tax where total income exceeds Rs.1 crore etc.
Asked 3 years ago in Capital Gains Tax
Hello,
The responses to your queries are as under (assuming that B is a tax resident of India):
1. Firstly, B will be liable to pay tax on the FMV of the share gifted to him (gifts to non-relatives are taxable under section 56(2)(x) of the Income Tax Act, 1961.).
Thereafter, the FMV of such share would become the cost of acquisition in the hands of B for the purpose of calculating capital gain on sale of such shares.
2. Long term capital gains are taxable at the rate of 20% (plus applicable surcharge and cess, as per the slab rate)
3. Yes.
Hope it would help!
Best regards,
CA Yogesh Malpani
Hi,
The following are the answers to your query
1.) Cost of acquisition for B is FMV and gift taxable in income from other sources under section 56(2)(vii).
2.) It is taxable @20%+4%(SHEC).. assuming that surcharge on your income is not applicable.
3.) Yes the surcharge will be applicable on your total income including this Long Term Capital Gain
Thanks & Regards
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Hi
1. Higher of cost of acquisition or book value.
2. 20.8 % (20% plus surcharge)
3. Yes
-A & B are both Indian residents & Indian tax residents -A is an individual whereas B is a Pvt Ltd company -A holds shares of foreign unlisted company since many years (long term) -Can A gift these shares to B (FY20-21) without any consideration? -If answer to above is yes, B proposed to sell these shares received from A in same FY in which the gift was received (FY20-21) -Q1: What will be the deemed cost of acquisition for B? FMV or book value or something else ? If FMV, who is appropriate authority to certify calculation of FMV for foreign unlisted company whose shares are being gifted. -Q2: At what rate will B be taxed for the deemed cost of acquisition ? -Q3: At what rate will the gain arising (selling price - deemed cost of acquisition) from sale of these shares be taxed for B ? -Q3: Will this deemed cost of acquisition and/or gain arising from sale of shares be included in B's income for the purpose of calculation of surcharge (7% above 1 crore & 12% above 10 crore)
Asked 3 years ago
In your case, tax will be chargeable at two point i.e. one at the time of gift and second at the time of sale.
- Yes A can gift to company B but the gift amount will be taxable in the hands of B. Value will be FMV and taxable under the head income from other sources.
Capital gain will be calculated as below.
1. FMV as calculated above will be treated as cost of acquisition in the hands of B.It will be indexed accordingly.
2&3. special rate @ 20%
4. Yes
Hi,
1. The cost in the hands of the B will be the purchase price of A. It will then be indexed.
2. It will be @20% assuming B is a resident Indian.
3. Yes, capital gain will be included in the limit of calculating surcharge.
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