LTCG on IPO / Bonus / Rights

Taxation
1

Nitin & Others,

How would LTCG affect taxation on shares acquired through IPO, Bonus, Rights issues? I am bit confused as we haven’t paid STT on these. My understanding is that the grandfathering still holds true but my question is do we pay higher tax rates as we haven’t paid STT?

Thanks

2

For this Exemption has been provided in Notification issued by Income Tax - Notification No. 43/2017

3

Can you please elaborate.

4

No in all these 3 cases there is no higher tax to pay, even though there isn’t any STT you have paid. These are all listed stock on the exchanges, so LTCG will be like normal listed stocks. You get the grandfathering benefit, and LTCG will be like any other stock.

Check this

https://www.incometaxindia.gov.in/communications/notification/notification43_2017.pdf

1 Like
5

Thanks Nithin. Just one last question.
I also have invested in equity Mutual Funds through COIN. Do you know if grandfathering is also applicable in Equity MF too?

6

Yes, in case of stocks and mutual funds.