Please make clear the way to declare capital loss on shares of delisted corporations. Please let me know the procedures, and for what number of years that may be carried ahead as per revenue tax rule. Hope you may be able to clear my doubt and allow me to get well my losses as per revenue tax rule in opposition to future capital positive factors.
As per the revenue tax legal guidelines one earns capital positive factors or incurs capital loss solely when the capital asset is transferred. The revenue tax act defines the time period “switch” to incorporate extinguishment of the rights within the asset along with precise switch of the asset. I presume that the shares you might be speaking about have solely been delisted and are nonetheless in existence.
Once the shares get delisted, it turns into nearly unattainable to promote them except the Company presents any exit route so successfully the funding turns into irrecoverable and is precise loss for the taxpayer however we can’t declare that loss because the shares have neither been extinguished nor transferred by you. In case the corporate has gone into liquidation or the corporate has been referred to NCLT beneath IBC and the NCLT has authorised the corporate to extinguish the shares, you’ll be able to declare the loss. Whether the shares have been extinguished or not you’ll be able to confirm it out of your demat assertion.
If the identical have been extinguished as properly, you’ll be able to apply the indexation in your authentic price and declare the entire listed price as brief time period or lengthy time period relying on the holding interval. Such loss will be carried ahead for eight years if the identical can’t be adjusted in the course of the present 12 months.
Balwant Jain is a tax and funding professional and will be reached at [email protected] and @jainbalwant on Twitter
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