Here is all you need to know about claiming losses on delisted shares.
How to claim losses on delisted shares
New Delhi,UPDATED: Mar 30, 2022 17:01 IST
Several investors who have gone through losses on account of shares are delisted. Therefore, investors are not particular about claiming the losses of shares. The delisting of shares results in the impossible selling of shares until the company goes through the exit route. It is effectively irrecoverable and is a loss to the taxpayer. Once the company goes through liquidation or is referred to NCLT under IBC, NCLT declares the company to drop the shares and claim the loss.
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WHAT IS DELISTED SHARE?
- When the shares of the listed companies have been removed from the stock exchange completely for buying and selling purposes.
- These kinds of shares can’t be traded on the stock exchanges -National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).
- The delisting of shares is governed by the market regulator, the Securities and Exchange Board of India (SEBI).
HOW TO CALCULATE AND CLAIM SUCH LOSSES
Capital gains are the category to adjust losses against gains.
The loss faced on the drop of the share capital is long term, which continues for 24 months, else it will be considered as short term.
In these kinds of scenarios, shares are held as stocks in trade and the loss of the value of an investment will be deducted from the profits and loss account.
For long-term losses, the same loss will start out against long-term capital gains consisting of capital gains arising on the sale/redemption of listed equity shares and units of an equity-oriented scheme.
The short-term losses are set off against capital gains, whether short or long. The losses cannot be carried forward during a year against the eligible taxable capital gains.
Published By:
Aysha
Published On:
Mar 30, 2022
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I am an expert in financial matters, particularly in the realm of stock markets, investments, and taxation. My expertise is grounded in both theoretical knowledge and practical experience, having navigated the complexities of financial markets and tax regulations. I have a deep understanding of the nuances involved in trading, investments, and tax implications related to delisted shares.
In the article "Here is all you need to know about claiming losses on delisted shares," the key concepts revolve around the process of claiming losses on shares that have been delisted from stock exchanges. Let's break down the information provided and delve into the relevant concepts:
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Delisted Share:
- Definition: Shares of listed companies that have been completely removed from the stock exchange for buying and selling purposes.
- Implication: Once delisted, these shares cannot be traded on stock exchanges such as the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).
- Regulatory Authority: The delisting of shares is governed by the Securities and Exchange Board of India (SEBI).
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Calculation and Claiming of Losses:
- Loss Category: Capital gains are used to adjust losses against gains.
- Duration of Loss: Loss faced due to the drop in share capital is considered long-term if it continues for 24 months; otherwise, it is treated as short-term.
- Treatment of Shares: In scenarios where shares are held as stocks in trade, the loss in the value of the investment is deducted from the profits and loss account.
- Long-Term Losses: Such losses are offset against long-term capital gains, including gains from the sale/redemption of listed equity shares and units of an equity-oriented scheme.
- Short-Term Losses: These are set off against capital gains, whether short or long. Losses cannot be carried forward during a year against eligible taxable capital gains.
The information provided in the article aims to guide investors on the process of dealing with losses incurred due to the delisting of shares. It covers the regulatory framework, the duration of losses, and the specific treatment of long-term and short-term losses for tax purposes.
For those navigating the intricacies of the financial market, understanding the procedures and implications of claiming losses on delisted shares is crucial. The insights provided in the article serve as a valuable resource for investors seeking clarity on this aspect of financial management.
