Income arising from Transfer of unlisted shares to be considered as Capital Gains; CBDT

Income arising from Transfer of unlisted shares to be considered as Capital Gains; CBDT

CBDT- Income Tax Act - Section 269SU - Taxscan

Central Board of Direct Taxes (CBDT) vide its Order dated 2nd May 2016 has given direction to its field formations, with a view to avoid disputes/Litigation and to maintain uniform approach that the income arising from transfer of unlisted shares, irrespective of period of holding, would be taxable under the head ‘Capital Gains’ except in certain circumstances where the Assessing Officer would examine the issue and take appropriate view.

This order is in continuation of the earlier circular of CBDT (circular No.6/2016 dated 29.2.2016), wherein a position of Income Tax Department regarding the transfer of listed shares and securities was spelled out.

With these initiatives, it is expected that there would be much-needed certainty and predictability regarding the taxability of income arising from the transfer of shares. Consequently, due to uniformity in approach, tax disputes and litigation on this issue would reduce substantially.

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