TAX COLOUM

I bought shares of an unlisted company in December 2024. In October 2025, the shares got listed. There is a substantial rise in the sale price. Therefore, I desire to sell the shares in January 2026. I will pay STT at the time of sale. Whether capital gain would be long term or short term as the period of holding is more than 12 months from the date of original shares purchased? Kindly clarify and advise.[EasyDNNnews:PaidContentStart]

You have purchased the shares when it was unlisted in December 2024. Now you want to sell the shares in the open market since the shares are now listed. In my opinion, holding of the shares from the date of purchase as unlisted till the date of sale of shares as listed will be more than 12 months. The same would be treated as long term capital gain under section 112A of the I T Act. Section 2(42A) of the I T Act says that if the listed securities are held for more than 12 months, the same will be considered as long term capital asset. There is no requirement under this section that shares need to be listed when you buy the shares. Section 112A of the I T Act is applicable once you sell the shares which are listed. Therefore, in your case, the holding period of shares starts from December 2024. Now if you sell the shares in January 2026, the holding period is more than 12 months and the shares are listed. The surplus which arises would be considered as long term capital gain.

Further, not paying STT at the time of purchase would not deprive you from the benefit of Section 112A of the I T Act since at the time of purchase, shares were unlisted; provision of STT was not applicable. Therefore, there is no default on your part and when it becomes applicable, i.e., at the time of sale of listed shares, STT would be paid. Therefore, entire capital gain, if you make on sale of shares, would be considered as long term capital gain. The applicable Tax rate is 12.5 per cent plus applicable surcharge.

I am a resident in India. I want to invest abroad, especially in US market through LRS route. Could you explain to me what are the requirements regarding disclosing foreign asset and foreign income and consequences if not complied?

A resident Indian can legally invest outside India through Liberalised Remittance Scheme (LRS). As you are a resident, you are liable to pay tax on your global income. As such, income earned on foreign assets, i.e., dividend, rent, interest, capital gain, etc., is taxable in India and therefore disclosure of income is a must and payment of taxes accordingly. If your foreign income is also subject to tax in foreign country, then you can also claim credit for taxes paid there against the taxes payable on a particular foreign income in India. For that, you have to file Form 67 duly filled-in, along with the Return of Income.

In your Tax Return, you have to give all the details of foreign assets and foreign income in Schedule FA in the ITR. Nondisclosure of this information would attract penalty under the Black Money Act. Schedule FA is basically for foreignassets and income earned outside India. Schedule FA is only for disclosure purpose. Foreign Assets reporting date is 31st December of the financial year (Calendar year). However, if you do not own any foreign assets but you are a signatory or a beneficiary of any foreign Bank account, then this disclosure is also required to be made. The information needs to be correct as the Department may verify with the information it gathered from foreign country later on and if any discrepancy is found, penalty provision can be initiated. Therefore, kindly remember to disclose each and every information in Schedule FA in your ITR.

I am a partner in a partnership firm where my other brothers are also partners. We all are getting remuneration and commission from the firm. I was told that payment to partners on account of remuneration is subject to TDS and other compliances under the Income Tax Act. Can you specify and guide us?

With effect from 1st April 2025, every firm/LLP responsible for paying any sum in the nature of salary, remuneration, commission, bonus, or interest to a partner of the firm, shall at the time of payment deduct income tax at 10 per cent. The threshold limit is ₹20,000. Hence, if your firm is paying remuneration, commission, bonus, or interest to any of the partners in excess of ₹20,000 per year, your firm is liable to deduct tax at 10 per cent under section 194T of the Income Tax Act. If your firm pays remuneration every month, then TDS has to be deducted every month and payment to be made accordingly within seven days from end of the month.

If the firm pays remuneration, interest, or commission at end of the year, i.e., on 31st March, then the entire TDS payment to be made by 7th April. The firm is also under obligation to file quarterly returns in Form 26Q. The firm also has to issue Form 16A to all the individual partners giving details of gross amount of remuneration and amount of withholding tax within 15 days from filing the quarterly returns.

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