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Wednesday, December 1, 2021

Income Tax on IPO Listing Gains: Have you earned money from IPO listings including Nykaa? Know how much tax will have to be paid on this

Many investors have made a lot of money from IPO listings this year.

Income Tax on IPO Listing Gains: Many investors have made a lot of money from IPO listings this year. Many companies have come up with IPOs to take advantage of the market boom and meet their fund requirements. This is a good opportunity for investors to earn money in a short period of time while investing in IPOs. However, other IPOs did not disappoint the investors much if the Paytm share listing is left out.

For example, the Nykaa IPO made many investors millionaires. The shares of Nykaa were listed at the price of Rs. Suppose if an investor had bought 100 shares of Nykaa at Rs 1125 and sold the shares on listing after allotment, he would have made a profit of Rs 2,01,800 – Rs 1,12,500 = Rs 89,300. This income is treated as capital gain under Income Tax rules.

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Is there a different tax rule for listing gain from IPO?

No, there is no separate tax rule for listing gain from IPO. According to Abhishek Soni, Co-Founder and CEO, Tax2win, the tax rules are the same for listing gains arising from IPOs and capital gains/losses arising from sale of shares. Soni told FE Online, “There is no separate concept for taxation of listing gain/loss of shares, capital gains/loss norms applicable on sale of shares only.”

Soni further said, “If the allotted shares in the IPO are sold within 12 months of holding, the profit/loss received will be treated as short-term capital gain/loss and will be taxed at 15%. If the investor sells the shares after one year, then it is considered as long-term capital gain and if the gain amount exceeds Rs 1 lakh, it will be taxed at 10 per cent. There is no tax on long term capital gains up to Rs 1 lakh.

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Taxpayers are required to disclose profit/loss from IPO listing in their income tax return. As per income tax rules, if a taxpayer is unable to set off the short term capital loss this year, he/she can carry it forward for 8 years on filing ITR this year.

(Article: Rajeev Kumar)

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Nisha Chawlahttps://www.businesskhabar.com/
She is an expert in Banking, Finance and working with an international bank. She sharing her ideas and knowledge with Business Khabar.
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