Friday, 10 August 2018

Booked profits from HDFC AMC IPO? Here's how you will be taxed

HDFC Asset Management Company made a stellar debut on the bourses by listing at 58 percent premium over its issue price. Many small retail initial public offering (IPO) investors would have used this opportunity to book profits. The issue price of the HDFC AMC IPO was Rs 1,100 whereas the scrip got listed at Rs 1,739. 

If you are one of the small investors who sold the company's shares at the listing price, you would have made a gain of Rs 639 per share. But before you start celebrating, know how these gains will be taxed. 

Taxation on equity gains 

According to income tax rules, capital gains on equities are taxed according to their holding period. Capital gains are divided into short-term and long-term. 

Any gains made on equity shares sold after holding them for less than a year are called short-term capital gains (STCG). Chetan Chandak, Head of Tax Research, H&R Block India says, "Since the holding period of the shares sold on listing day is less than a year, these gains will be qualified as STCG." 

On the other hand, if you have sold equity shares after holding them for more than a year, then these gains are called long-term capital gains (LTCG). 

Indian Stock Market Updates click here Trade Nivesh 

"If you sold these shares through the recognized stock exchange and paid STT on the sale transaction then these gains will be taxable at 15 percent under section 111A of the income tax Act," adds Chandak.

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