Income Tax on Unlisted Shares in India

Income Tax Income from Capital Gains
21

Hi,

I got RSUs from my company (not listed in India) and the tax amount was collected as Sell-To-Cover at the time of vesting itself (TDS). This RSU benefit is shown as perquisites in my Form-16. I haven’t sold any of the units. Do I still need to report this perquisites amount as Schedule Foreign Asset (Double counted)?

22

Hi @Amarthya_Gurudu

There are two parts to the RSU transaction as follows

  1. When you get RSUs from company - These are considered as perquisites by employers. Tax amount is calculated considering the FMV of the units.
  2. When RSUs are sold - You realize capital gains or losses. Since you have already paid taxes upto FMV of units, If any units are sold then the cost of acquisition to calculate capital gains or losses will be FMV of the units.

Here we also need to consider the gain or loss (if any) from the STC shares. It should be minimal due to timing and/or any selling expense incurred if sold on the same day.

Taxation of RSU is similar to ESOP.

https://www.google.com/amp/s/learn.quicko.com/esops-taxation-in-the-hands-of-employee

Hope this helps!

23

Ma’am,

(1) My RSUs (unlisted) vested in Jun 20. I want to sell these RSUs (within 2 years) and invest in property ( may be land for construction or Flat) . Can I get exemption on capital gain ?? Pl provide me more detail.

(2) I may invest in a property with a group of people who will purchase the land. Land will be divided in equal parts and will register individually. After land registration group will hire a builder who will construct multistory apartment . Once apartment is ready …flats will be divided in to landowners.
Can I get capital gain exemption if I invest in this type of property ??

24

Hello,

We are selling unlisted shares of a company registered in india . The buyer are 2 foreign companies. 1 is registered in USA and another in Mauritius. We are 2 sellers . I am a resident and other is NRO.

Does the companies need to withhold tax while paying us the sale consideration.

If yes is it applicable only for the NRO seller? Or for both ?

Thanks

Vishal

25

Hello,

We are selling unlisted shares of a company registered in india . The buyer are 2 foreign companies. 1 is registered in USA and another in Mauritius. We are 2 sellers . I am a resident and other is NRO.

Does the companies need to withhold tax while paying us the sale consideration.

If yes is it applicable only for the NRO seller? Or for both ?

Thanks

Vishal

26

@Anar_Desai, requesting you to share insights here.

27

Hello @prk_ved,

Since you plan to sell unlisted shares within 2 years, it shall be considered as sell of short term capital asset. No exemption on capital gain invested in property is available for sell of short term capital assets.

Further, you get exemption u/s 54F of the Act for investing in a house property for sell of any long term capital asset other than house property. However, it has to be a residential house property in which you invest.

Hope it helps.

28

Hey @Vishagar ,

Sale of unlisted shares of a company registered in India to foreign companies by NRO will attract withholding tax u/s 195 of the Act.

Hope it helps.

29

Hi,

I am a Non-Resident and was not aware of this declaration rule. I inherited some shares in Physical Form from my late mother who died in May 2005 and they were transferred in my name in Feb 2006.The shares were originally listed when my late mother acquired them, but after some years got de-listed. I never de-matted them. I never sold them and hence never realized Capital Gains. I would like to start by filing an ITR-2 this year. How do I enter the cost of acquisition? I do not know how much my late mother purchased them for. Secondly how many previous ITRs will I have to amend as I have held these shares? Thank you.

30

@Sakshi_Shah1 can you help?

31

Hi , I hold some unlisted shares of two companies, one of which got listed recently. Do I need to show these in my ITR, I haven’t sold any shares though.

If these are to be mentioned somewhere , kindly let me know under what section in quick filing do I have to mention such shares, and what info needs to be filled in detail. Only the unlisted shares that I bought in FY21-22, needs to be mentioned or those which I bought in FY22-23 should also be mentioned?

32

Hi @Sheirsh_Saxena,

You should report it under the head income from capital gains. In case you have not sold these shares, there would have not been any capital gains income. If you received dividends on these shares then you should report it under the head income from other sources.

Here’s an article to help you understand more on income tax on unlisted shares

33

I have not sold any of these shares , neither have I received any dividends, should I mention the shares that I hold under any section?

34

Let me know on this please

35

I am expecting LTCG on Unlisted shares(listed in NYSE) in FY 2022-23. I do not have plans of purchase or construction of residential property.

Is it possible to claim LTCG exemption under Section 54F by investing the gains in SBI CapGains Plus account?

36

claiming exemption by investinf in capgain surplus account is only applicable when you have plans for purchase of residential property in two years, otherwise exemption claimed today will be taxable after two years

Regards
CA Ankit Aggarwal
9999274569

37

Thanks Ankit.

Is there any alternate available to claim exemption like purchase of bonds?

38

Hi

I have LTCG in FY2022-23 from unlisted shares.

What are the options to claim Capital Gain Exemption other than investing in residential property.

Thanks

39

Hey @prasidhi, apart from investing in residential house property, you can claim exemption u/s Section 54EE which includes Exemption on investment into units of a fund notified by the central govt to finance startups

You can read more about it here

42

I have not sold any of these shares , neither have I received any dividends, should I mention the shares that I hold under any section?