Capital gain on shares
VIRAF SIGANPORIA
(Querist) 06 July 2010
This query is : Resolved
I inherited few shares from my mother and got it transferred to my name and my husband name in December 2009. I sold this shares in May 2010 for value Rs.100000/-. My CA insists that date of acquisition will be Dec.2009 and cost of acquisition will be ZERO. As such I have to pay shortterm capital gain tax on full proceed. Is he right?
VIRAF SIGANPORIA
A V Vishal
(Expert) 06 July 2010
In computing the period of holding, the period for which the shares were held by the previous owner will also be taken into account as the shares have been acquired by you through inheritance.
The sale of shares may be exempt if the gain is long term, and will be taxed at 10 per cent if the gain is short term. The gain will be taken as long term if the shares have been held for a period exceeding 12 months else the gain would be short term.
Kumar Thadhani
(Expert) 07 July 2010
Your CA has wrongly advise you follow the instructions given by expert Mr. Vishal.
Vineet
(Expert) 07 July 2010
Your CA is absolutely wrong and please ask him to refer to Explanation (b) of section 2(42A) and section 49(1) of Income Tax Act.
The cost of shares in your hand shall be the same as in your mother's hand and the period of holding shall be counted from the date onwhich your mother acquired these shares.
So if you have sold these shares through stock exchange paying securities transaction tax, the capital gains tax shall be Nil if the total period of holding from the date of acquisition by your mother is more than 12 months. In case of short term capital gain (holding less than 12 months) the tax payable @15.45%.
