LTCG tax/exemptions on sale of ESOP shares of unlisted foreign company

LTCG tax/exemptions on sale of ESOP shares of unlisted foreign company

I am Indian national/resident.

Purchased UNLISTED foreign shares under ESOP scheme.
Indexed buy value = 10 lacs
Sell value after 24 months = 90 lacs
For the sake of simplicity, lets ignore surcharge, cess, other income

Can I pay LTCG tax 10% without indexation?
OR I don't have this option and need to pay 20% with indexation?

Any difference in LTCG tax if the ESOP are of foreign LISTED company?

What all exemptions are available for me - 54F, 54EC, 54EE?

Are these tax exemptions available if LTCG > 2 crore?

Can I avail these exemptions multiple times in my life?

Indexed buy value = 10 lacs
Sell value after 24 months = 90 lacs
LTCG = 80 lacs
If I do not invest full consideration in bonds/property, then how do we calculate pro-rata?
Say I buy a property worth 70 lacs [50 lacs down payment and 20 lacs loan], 
Will the entire 70 lacs exempted from tax and I would need to pay LTCG tax on remaining 80-70=10 lacs
OR is it 70*80/90=62.2 lacs exempted and tax on 80-62.2=17.8 lacs

Can I buy under construction property? If I pay in installments to builder, do I need to keep balance money capital gain account?
How much LTCG is exempted?

Carry forward LTCL
I had a loss in FY 2017-18, declared in ITR and carried forward
Next year, in FY 2018-19, I declared but filed in ITR after due date
In FY 2019-20, I filed in ITR within due date. Can I use LTCL from FY 2017-18 which was filed within due date

Asked 3 years ago in Capital Gains Tax

1. There is no difference whether foreign shares are listed or unlisted.

2. You will have to pay 20% tax. There is no option to pay 10% tax.

3. To know about exemptions click here: https://www.taxontips.com/tax-in-india-on-income-earned-from-rsu-vested-in-foreign-countries-and-exemption-from-such-income/

I would recommend to book phone consultation for better discussion.

Hope you find the above information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Naman Maloo

CA, Jaipur

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- LTCG would be calculated @20% after indexation of cost. Cost of acquistion would be FMV of the shares on the date of excercise of the option. Sale consideration should not be less than FMV of the shares.

- Exemption is available only u/s 54F. To avail exemption u/s 54F, you should not own more than one residential house on the date of transfer of shares other than the new residential house.

- Yes exemption is available if LTCG is more than 2 crore

- Yes you can avail multiple times

- Rs. 62.20 lacs would be exempted

- Yes you can purchase underconstruction property. Yes you have to deposit the balance amount in CGAS before filing of ITR succeding the year in which capital gain arises. exemption would depends on the cost of new asset.

- Yes you can use LTCL of FY 2017-18.

For detailed discussion and further clarification on various points, you can consider phone consultation. Still there are many points to discuss on this subject.

Vivek Kumar Arora

CA, Delhi

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Thank you Vivek and Naman. I have a follow up question(s) on this, and after this I will have a phone consultation with more data.

(1) Cost of property: can we include home loan interest, registration, stamp duty, cost of interior etc?

Definition of number of properties - for the purpose of using section 54F
(2a) property in the name of spouse is not counted, right?
(2b) if I had a property registered in my name but power of attorney in my parent's name [they are paying house tax, bills etc], does it count in my name or not?

(3) Calculation actual exemption
Say I sell ESOP shares on 1 Oct 2021 and buy property worth 70 lacs on 1 Dec 2021.
50 lacs down payment, 20 lacs loan. Assume I pay 25k pm in loan EMIs for 7y.
For ESOP shares: buy=10 lacs, sell=90 lacs, LTCG=80 lacs.
I understand max exemption potential, in this case, is 70*80/90=62.2 lacs
Then how much of this qualify for exemption? All of this OR only the amount that I pay in 24 months
I understand capital gain account is upto 2~3 years - depending on apartment or land/construction

(4) Carry forward LTCL
I had a loss in FY 2017-18, declared in ITR and carried forward
Next year, in FY 2018-19, I declared but filed in ITR after due date
From FY 2019-20, while filing ITR within due date, can I continue to mention LTCL from FY 2018-19
What will happen - this will be ignored or considered in future filings or I should not mention at all. Note ITR sheet has green cells to enter and white cells are not editable, carry forward loss is automatically calculated

Asked 3 years ago

1) Yes. Cost of interior would be treated as cost of improvement and that should be for habitable purpose and luxurious in nature. In such case, interest on loan cannot claimed as deduction under the head income from house property.

2a) Correct not counted

2b) It will be counted

3) Entire Rs.62.20 lacs if house is purchased within 2 years from the date of sale

4) If ITR for FY 2017-18 was filed within due date then you can claim it in FY 2020-21

Vivek Kumar Arora

CA, Delhi

Available Now

4951 Answers

1105 Consultations

Talk to Vivek Kumar Arora NOW!

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