Booked stellar listing gains on Tata Tech, IREDA IPOs? Know taxation rules here | Mint
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Business News/ Money / Personal Finance/  Booked stellar listing gains on Tata Tech, IREDA IPOs? Know taxation rules here
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Booked stellar listing gains on Tata Tech, IREDA IPOs? Know taxation rules here

Investors who have booked profits on listing gains will be liable to pay a short-term capital gains tax of 15%, said Nirav R Karkera (Head - Research, Fisdom)

Stellar listing gains on Tata Tech, IREDA IPOs: The tax is calculated based on the holding period.Premium
Stellar listing gains on Tata Tech, IREDA IPOs: The tax is calculated based on the holding period.

The listings of five mainboard initial public offerings (IPOs) kept investors busy last week So, all those who booked profits last week from the bumper debut of Tate Technology, and India Renewable Energy Development Agency (IREDA) need to know how their income from these gains will be taxed. An income made on the sale and purchase of shares falls under the capital gain head.

How gains from IPO are taxed?

Explaining the income tax rule getting applied to income from an IPO, Mumbai-based tax and investment expert Balwant Jain said, "In case of income from IPO, same income tax rule will be applied but the holding period of the stock will not begin with the date of investment but from the date of allotment of shares to the investor."

“Investors who have booked profits on listing gains will be liable to pay a short-term capital gains tax of 15%. Such gains can be set off against any eligible previous short-term capital loss carried forward and available for such set-off," said Nirav R Karkera (Head - Research, Fisdom)

For investors with a registered business engaged in the activity of investing as a business, gains would be treated as business income and subject to deduction of incidental costs before being taxed at applicable tax slabs he added.

Capital gains tax rule

The tax is calculated based on the holding period. If the investor has held the stock for more than 12 months, then the income will fall under the long-term capital gain (LTCG) category. However, if the holding period is less than or equal to 12 months, then the stock market income would be called short-term capital gain (STCG).

Over the years, the tax department has become vigilant and tracks all transactions and compares them with the returns filed by an individual. Misreporting or under-reporting income can be traced, and may result in penalties and fin

Tata Tech shares make bumper debut

On November 30, Tata Technologies shares got listed at 1,200 apiece on NSE, a premium of 140% to the issue price of 500 per share. This was the best listing in the Indian stock market since November 2021. 

After this impressive stock market debut, Tata Technologies shares extended gains and made a high of 1,400 apiece on both the exchanges, thus, more than doubling investors’ wealth.

The IPO had garnered heavy interest from all categories of investors, with over 73.38 lakh total applications.

IREDA shares make bumper debut

IREDA made an impressive market debut on November 29, listing at a 56.25 percent premium to the issue price of 32. The stock opened at 50 on both NSE and BSE.

IREDA IPO was subscribed 38.80 times on the last day of bidding.

Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

 

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ABOUT THE AUTHOR
Sangeeta Ojha
A business media enthusiast. Writes on personal finance, business and banking.
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Published: 06 Dec 2023, 01:54 PM IST
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