CA Intermediate · Taxation · Capital Gains
Rohit, a resident individual, bought unlisted equity shares of a private company on 20 June 2024 and sold them on 15 May 2026 at a profit. Which statement correctly describes the gain for tax year 2026-27?
The gain is a short-term capital gain taxed at Rohit's normal slab rates. Unlisted shares must be held for more than 24 months to be long-term, and he held them for under 24 months. The flat 20% rate is limited to STT-paid listed equity shares.
- AIt is a short-term capital gain, taxed at the normal slab rates applicable to himCorrect
- BIt is a long-term capital gain taxed at 12.5% without indexation
- CIt is a long-term capital gain taxed at 20% with indexation
- DIt is a short-term capital gain taxed at a flat 20%
Explanation
Unlisted shares become long-term only if held for more than 24 months. Here the holding period is about 23 months and 25 days, so the gain is short-term. The special 20% rate applies only to short-term gains on listed equity shares on which STT is paid, so it does not apply here. The gain is therefore taxed at the normal slab rates.
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