Income Tax treatment for delisted shares

Hi, I hold demat shares that were delisted due to defaults by the company. Cannot sell it and it looks unlikely to relist again. Can I book this shares as a LTCL against the LTCG. Please revert.

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Hello @Rajesh ,

You can report the loss only once you sell the shares. Alternatively, if you feel the Company would not be listed again in the future, you can write off the shares and report a loss in P&L Account. This loss can either be a long-term or short-term loss depending upon the holding period of the shares.

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Thanks for the reply. Please clarify what is the P&L account wherein I can write off and report this LTCL (holding above 1 year). I use ITR-2 for individual.

Hello @Rajesh

If the sale of shares is treated as a Business Income (ITR-3), the taxpayer can write off the investment in shares and report a loss in the P&L Account. However, if you’re filing ITR-2, you can book the LTCL by showing the entire cost of acquisition as a loss in ITR. This loss can be set off against LTCG.

You already suggested that we can write off the stock that got unlisted from bse/nse and the company is in liquidation and unikely to list again. As such I am willing to write it off independent of whether it lists again or no. Once I write it off, i can claim the loss. The unlisted stock would still be in my DP/demat. What would happen to those stocks. May be if they ever get relisted in 0.001% case, then one can always pay capital gain tax from that point?

Could u please confirm that I can just write it off and claim the capital loss? The company is already in liquidation?

@Kaushal_Soni @Divya_Singhvi @Laxmi_Navlani @Sakshi_Shah1 @AkashJhaveri can you?

Sakshi, thanks for response on the question.
on LTCL set off against LTCG for bankrupt delisted shares, to further clarify, in ITR2 we would need to list name of the stock/company purchase amount as INR xxxx and sale amount as INR 0 (zero). correct ?. This way the LTCL will set off against other LTCG.

I appreciate your response.

Hello @Santosh_Ratan,

Yes, you will have to enter the details of sale of the bankrupt shares as mentioned by you, the purchase value and sales value. The resulting LTCL will get adjusted against LTCG. If not, then LTCL can be carried forward for 8 years and can be adjusted against future profits.

Read more on Set Off and Carry Forward of losses

Hello - I am Resident Indian. I have a Capital gains of 1.9 lakh this year. So I understand I have to pay LTCG for the Rs 90.000 at 10%. But I bought 1 lakh rupees worth of shares of LEEL Electricals in 2018 which got delisted. Shares stopped trading and suspended in 2020. Is there any way I can realize this 1 lakh loss to offset against 1.9 lakh profit I made this Financial year, as it cannot be sold on exchange.?
As shares cannot be sold, if just leave it in my DEMAT account , can i book this loss when filing taxes declaring this as zero value? Or is it necessary that i transfer these shares to my son’s NRI Zerodha demat using CDSL easiest? Would that transfer of asset (stock) from my name to my son be eligible to book a loss? Please advise.

Per the below article, it says to transfer shares

I am holding few (scripts)shares in my demat account also some scripts as physical, can unable to dematerialise as the company disappeared from the system, no contact points, for these Shares I am holding them for a long time because of unlisted & untreatable stocks.

Please guide me how to book my ( LTCL) losses under Income Tax act. Like me many more small investors are facing the issues, Hope you as last point of contact to reach for a permanent solution Please reply as early as possible.

There is no clear reply from CAs, too.

Awaiting your reply at the earliest.emphasized text

Thanking you,

Hey @BS_Purohit,

You can consider the sales value of such shares as zero, and report your long-term capital losses while filing the ITR.

Hope this helps!

Unfortunately, if your shares have been delisted due to defaults by the company and are unlikely to relist again, you may not be able to book them as a Long-Term Capital Loss (LTCL) against Long-Term Capital Gains (LTCG). It’s advisable to consult with a financial advisor or tax expert to explore any potential options or implications specific to your situation.