Please explain how to claim capital loss on shares of unlisted companies. Please tell me about the procedures, and for how many years can be extended as per income tax rule. Hope you will be in a position to clear my doubts and enable me to recover my loss against future capital gains as per income tax rule.
As per the income tax laws, a person earns a capital gain or incurs a capital loss when the capital asset is transferred. The Income Tax Act defines the term “transfer” to include the termination of rights in property other than the actual transfer of property. I think the stocks you are talking about are just unlisted and are still in existence.
Once the shares are delisted, it becomes nearly impossible to sell them, unless the company provides an exit route, so that the investment becomes irreversible and causes a real loss to the taxpayer, but we cannot claim that loss. as the shares have neither been liquidated nor transferred by you. . If the company is liquidated or the company has been referred to NCLT under IBC and NCLT has authorized the company to liquidate the shares, you can claim damages. Whether the shares have expired or not, you can verify it from your demat statement.
If this is also liquidated, you can apply indexation to your original cost and claim the entire indexed cost as short term or long term depending on the holding period. Such loss can be carried forward for eight years if it cannot be adjusted during the current year.
Balwant Jain is a tax and investment specialist and can be contacted on Twitter at jainbalwant@gmail.com and @jainbalwant.
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