{"id":7889,"date":"2024-04-30T07:46:58","date_gmt":"2024-04-30T07:46:58","guid":{"rendered":"https:\/\/www.incredmoney.com\/blog\/?p=7889"},"modified":"2025-02-21T06:07:10","modified_gmt":"2025-02-21T06:07:10","slug":"taxation-on-unlisted-shares","status":"publish","type":"post","link":"https:\/\/devblog.incredmoney.com\/blog\/taxation-on-unlisted-shares\/","title":{"rendered":"Taxation on Unlisted Shares"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Investing in<\/span><a href=\"https:\/\/www.incredmoney.com\/unlisted-shares\"> <b>unlisted shares<\/b><\/a><span style=\"font-weight: 400;\"> can be lucrative, but understanding the taxation aspects is crucial. Unlike listed shares, unlisted shares have different holding periods and tax implications under Indian tax laws.<\/span><\/p>\n<h3><b>How Are Unlisted Shares Taxed in India?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Tax on<\/span><a href=\"https:\/\/www.incredmoney.com\/unlisted-shares\"> <b>unlisted shares<\/b><\/a><span style=\"font-weight: 400;\"> depends on the holding period:<\/span><\/p>\n<h4><b>1. Short-Term Capital Gains (STCG) Tax<\/b><\/h4>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">If unlisted shares are sold within <\/span><b>24 months<\/b><span style=\"font-weight: 400;\"> of purchase, the gains are treated as <\/span><b>short-term capital gains<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Tax Rate:<\/b><span style=\"font-weight: 400;\"> STCG is taxed as per the investor\u2019s applicable income tax slab rate.<\/span><\/li>\n<\/ul>\n<h4><b>2. Long-Term Capital Gains (LTCG) Tax<\/b><\/h4>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">If unlisted shares are sold after <\/span><b>24 months<\/b><span style=\"font-weight: 400;\">, the gains qualify as <\/span><b>long-term capital gains<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Tax Rate:<\/b><span style=\"font-weight: 400;\"> LTCG on unlisted shares is taxed at LTCG on unlisted shares is taxed at 12.5% without indexation benefit.<\/span><\/li>\n<\/ul>\n<h3><b>Other Tax Considerations for Unlisted Shares<\/b><\/h3>\n<h4><b>1. Dividend Taxation<\/b><\/h4>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Dividends received from unlisted companies are added to the investor\u2019s income and taxed as per the applicable tax slab.<\/span><\/li>\n<\/ul>\n<h4><b>2. Gift Tax on Unlisted Shares<\/b><\/h4>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">If unlisted shares are received as a gift, they are taxed as per the <\/span><b>Income Tax Act, Section 56<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Gifts from relatives are <\/span><b>tax-exempt<\/b><span style=\"font-weight: 400;\">, while those from non-relatives are taxed if the value exceeds \u20b950,000.<\/span><\/li>\n<\/ul>\n<h4><b>3. Tax on Buyback of Unlisted Shares<\/b><\/h4>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">If a company buys back its unlisted shares, the buyback amount is taxed in the hands of the shareholder as <\/span><b>&#8220;income from other sources&#8221;<\/b><span style=\"font-weight: 400;\"> under Section 2(22)(f) at their applicable income tax slab rates.<\/span><\/li>\n<\/ul>\n<h3><b>How to Save Tax on Unlisted Shares?<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Capital Gains Exemptions:<\/b><span style=\"font-weight: 400;\"> Investments in a <\/span><b>residential house<\/b><span style=\"font-weight: 400;\"> under Section 54F may provide exemptions, subject to conditions.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Holding Period Strategy:<\/b><span style=\"font-weight: 400;\"> Holding unlisted shares for more than <\/span><b>24 months<\/b><span style=\"font-weight: 400;\"> qualifies them as <\/span><b>long-term capital assets<\/b><span style=\"font-weight: 400;\">, taxed at <\/span><b>12.5%<\/b><span style=\"font-weight: 400;\"> without indexation benefit.<\/span><\/li>\n<\/ul>\n<h3><b>Sell Unlisted Shares Easily with InCred Money<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Looking to buy or sell<\/span><a href=\"https:\/\/www.incredmoney.com\/unlisted-shares\"> <b>unlisted shares<\/b><\/a><span style=\"font-weight: 400;\">? Explore secure transactions with<\/span><a href=\"https:\/\/www.incredmoney.com\/unlisted-shares\"> <b>InCred Money<\/b><\/a><span style=\"font-weight: 400;\"> and optimize your investments while staying tax-efficient!<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Investing in unlisted shares can be lucrative, but understanding the taxation aspects is crucial. Unlike listed shares, unlisted shares have different holding periods and tax implications under Indian tax laws. How Are Unlisted Shares Taxed in India? Tax on unlisted shares depends on the holding period: 1. Short-Term Capital Gains (STCG) Tax If unlisted shares [&hellip;]<\/p>\n","protected":false},"author":8,"featured_media":7890,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[9,29],"tags":[],"class_list":["post-7889","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-taxation","category-unlisted-shares"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.2 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Taxation on Unlisted Shares - InCred Money<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/devblog.incredmoney.com\/blog\/taxation-on-unlisted-shares\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Taxation on Unlisted Shares - InCred Money\" \/>\n<meta property=\"og:description\" content=\"Investing in unlisted shares can be lucrative, but understanding the taxation aspects is crucial. 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