Income from transfer of unlisted shares will be counted as capital gains
The tax department is looking to reduce litigation and bring in a uniform approach to classification of income
New Delhi: In yet another clarification aimed at reducing disputes, the income-tax department has said that income from transfer of unlisted shares will be categorized as capital gains, irrespective of the holding period.
This is a continuation of the tax department’s efforts to reduce litigation and bring in a uniform approach to classification of income.
In February this year, the tax department had issued a similar clarification regarding classification of income arising from transfer of listed shares wherein it had said that an assessee could classify income from a transaction as capital gains after 12 months.
However, the tax department has listed three exceptions wherein this clarification will not be applicable. It will not apply in cases where the genuineness of transactions in unlisted shares is questionable, where a question of lifting the corporate veil arises and where there is transfer of control and management.
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