1. Long Term Capital Gain (LTCG): If an unlisted stock is sold after holding for more than 24 months, gains on such sales will be taxed at 20% after indexation. In case the shares are held by a non-resident Indian, the tax is 10% without indexation.
“The long term capital gains from unlisted shares are taxed at 20 per cent u/s 112 of the IT Act after claiming the benefit of indexation whereas the short term capital gains are applicable slab rate of the investor,” he added.
The fair market value of unquoted equity shares shall be calculated simply by ascertaining “Book value of Assets (Less) Book value of Liabilities.”
At present, a 10% tax is levied on such long-term capital gains. However, the new law won’t be applicable for all the gains up to 31st January 2018. This implies that any person who will sell shares after 1st April, 2018 will have to pay a 10% long-term capital gains tax if he/she gains an amount more than Rs. 1 lakh.
How is capital gain calculated?
In case of short-term capital gain, capital gain = final sale price – (the cost of acquisition + house improvement cost + transfer cost). In case of long-term capital gain, capital gain = final sale price – (transfer cost + indexed acquisition cost + indexed house improvement cost).
What is short term capital gain in case of unlisted debentures?
In case of unlisted securities, if the stock is sold within 24 months, it’s considered short term. The gains are added to the income of the person and taxed at a marginal rate.
How are listing gains taxed?
If there is a listing gain, it will be a short-term capital gain. The short-term capital gain will be taxed at 15 per cent if you sell the shares through the recognised stock exchange and pay the Securities Transaction Tax (STT). There will be a 15% tax on such short-term capital gain as per the Income Tax Act.
Capital Gains Tax Example Calculation
- Your salary is $100,000 per year.
- Your income tax bracket is 37% — ($90,001 – $180,000)
- You make a $10,000 capital gain on shares you own for less than 12 months.
- You sell the shares and 100% of the $10,000 capital gain is taxed at 37%
- You will pay a CGT amount of $3,700 on the shares.
How do you calculate holding capital gain period?
2001. Holding period: It is calculated as the number of days or months for which the asset is/was held by the assessee. The period starts from the date on which the asset was acquired by the assessee and ends on the date immediately preceding the date of transfer of the asset.
After a company goes public, and its shares start trading on a stock exchange, its share price is determined by supply and demand for its shares in the market. If there is a high demand for its shares due to favorable factors, the price will increase.
To figure out how valuable the shares are for traders, take the last updated value of the company share and multiply it by outstanding shares. Another method to calculate the price of the share is the price to earnings ratio.
What are the 5 methods of valuation?
5 Common Business Valuation Methods
- Asset Valuation. Your company’s assets include tangible and intangible items. …
- Historical Earnings Valuation. …
- Relative Valuation. …
- Future Maintainable Earnings Valuation. …
- Discount Cash Flow Valuation.