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Old 4th November 2008, 11:28   #1
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Default Share valuations for Income Tax

Greetings everyone,

I would like to declare shares that have been left by my parents (1970 onwards) and subsequently purchased by myself from the open market, over a period of 30 years. How would the income tax value my stock/shares for tax purposes?

Kindly advise.
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Old 4th November 2008, 13:41   #2
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Buying and selling shares isn't treated as an income for a retail investor, its treated as a capital gain/loss. You have to pay short term capital gains tax if you have sold shares within 1 year of buying. Short term capital gains tax rate is 10% and Long term capital gains tax is currently 0%

Capital gains tax calculation is a bit complex - its not just straight forward 10% of your profit. There is something called indexation and Capital loss which can be used to offset the capital gained. Either get a CA to do the calculation for you or read some material on the web.

Last edited by spadival : 4th November 2008 at 13:43.
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Old 4th November 2008, 14:00   #3
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You do not have to pay tax on those shares left by your parents by means of Will (post demise). If you received it as a gift, you have to pay Capital Gains tax.
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Old 4th November 2008, 15:23   #4
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Quote:
Originally Posted by suvi View Post
If you received it as a gift, you have to pay Capital Gains tax.
Are you sure about this? - I am not too sure! - Are gifts in kind taxable?

Otherwise - the question of income tax valuation arrises when you make a profit on them i.e. by selling them.

And if you sell them through a recognised stock exchange [and pay STT (securities transaction tax) on them] - LTCG (long term capital gain) is exempt.

[Disclaimer - I take no responsibility of my opinion]
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Old 4th November 2008, 17:25   #5
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Are there any records to be maintained on subsequent purchases of shares, and for what duration?

If there are no records available, how do we proceed with the matter?
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Old 4th November 2008, 17:41   #6
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when you sell these shares - you'll need to compute the gain on such sale.

For that you'll need the dates and rates of purchases - date should be easy - rate you'll have to dig out or maybe can put approx [confirm this with someone dealing in this] since its not going to be taxable.

For the IT calculation you'll add this income to your total income and then subtract it as exempt.

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Old 4th November 2008, 19:48   #7
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Quote:
Originally Posted by SLK View Post
Are you sure about this? - I am not too sure! - Are gifts in kind taxable?

Otherwise - the question of income tax valuation arrises when you make a profit on them i.e. by selling them.

And if you sell them through a recognised stock exchange [and pay STT (securities transaction tax) on them] - LTCG (long term capital gain) is exempt.

[Disclaimer - I take no responsibility of my opinion]
With the disclaimer that i am not a Chartered Accountant
Gift is not taxable, but any income arising out of the Gift is. If your father gifts you Rs 1 lakh, you need not pay tax. but if that 1 lakh earns you an annual interest of Rs 10,000 you need to add it to your income.
In case of shares, as you mentioned long term Capital gains is currently tax free since you will be paying STT. however if it is short term, you need to pay tax (10% or 15% of the gain, not sure). For computing the gain, i am not sure which value (the original purchase price or the price at the time of gift). in fact there can be a confusion if the gain is short term or long term depending on whether we take purchase date or gift date.
It will be great if any our members can clarify this.
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Old 6th November 2008, 14:45   #8
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@luvjascha sorry for hijacking your thread!

OT: Need to invest 15K in guaranteed returns in 5 years. Where to invest this money? Please suggest.

Thanks,
Ramki
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Old 6th November 2008, 15:22   #9
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Quote:
Originally Posted by ramki067 View Post
@luvjascha sorry for hijacking your thread!

OT: Need to invest 15K in guaranteed returns in 5 years. Where to invest this money? Please suggest.

Thanks,
Ramki

I prefer NSC for 6 years, helps in tax rebates and safety factor also. And I cannot remove the same as and when I wish before 6 years
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Old 6th November 2008, 17:09   #10
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Quote:
Originally Posted by lambuhere1 View Post
I prefer NSC for 6 years, helps in tax rebates and safety factor also. And I cannot remove the same as and when I wish before 6 years
Thanks very much lambuhere1. I shall go for NSC.

Regards,
Ramki
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