Taxation on selling unlisted shares after IPO

Taxation
1

Can someone please explain STCG and LTCG Taxation on selling unlisted shares after listing (IPO) for Indian stocks as well as for US stocks?

Will the taxation be as per the unlisted shares taxation rules or listed shares?

@Quicko

2

Hi @Jack_R,

After IPO, the shares are converted to listed shares and hence will be taxed as follows.

  • Holding period > 12 months (LTCG): 12.5%
  • Holding period < 12 months (STCG): 20%

The above tax rates are for domestic shares. For foreign stocks the following tax rates shall apply.

  • Holding period > 24 months (LTCG): 12.5%
  • Holding period < 24 months (STCG): Slab rate

Hope this helps!

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3

Hi, @Quicko , do I need to pay the advanced tax on the profits gained from the sold US stocks ? Or is it a one time tax on the profits that need to be paid during the filing time of the FY ? Thanks

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4

As per my knowledge, you need to pay advanced tax on everything. @Quicko Please confirm

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5

Hey @Deva1 Yes, advance tax is payable on profits gained from sale of US Stocks.

Since the income from sale of US Stocks is taxed under the head “Capital Gains”, you can pay advance tax on actual basis i.e “as and when you earn” and not on estimated basis.

Hope, this helps.

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6

@Quicko Do we need to pay Advanced tax only on Capital gains? or non-capital gains as well? Can you please explain if there is any category on which we don’t need to pay Advanced tax?

7

Hey @Jack_R ,

Advance tax applies to all types of income, not just capital gains, if your total tax liability exceeds â‚ą10,000 after accounting for TDS and TCS.

If you are salaried, you generally don’t have to pay advance tax on your salary income because employers already deduct TDS. But, you must still consider other income sources—like capital gains, freelance income, rental income, or interest—when calculating the total tax liability.

We have covered more details in this blog.

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