Unlisted Share Taxation in India

Tax on unlisted shares depends on current law, holding period, residency, transaction price and the nature of the security. For many unlisted financial assets, the long-term holding threshold is 24 months under the post-July 2024 framework, while short-term gains are generally taxed at applicable rates and long-term gains may attract the prescribed LTCG rate.

The acquisition date and cost must be evidenced.

Fair-market-value provisions can affect the seller or buyer when consideration diverges from prescribed value.

ITR forms may require specific disclosure of unquoted shares and capital gains.

IPO listing can change the applicable security status and future tax treatment.

Bonus, split, conversion or ESOP history can complicate cost.

NRI transactions may add withholding and treaty questions.

Before acting, answer five questions in writing: keep allotment and transfer documents; track corporate actions; obtain a valuation where required; reconcile demat and bank records; and use current tax advice before sale.

Tax planning starts when the share is acquired, because missing records are difficult to recreate at exit.