Made money from Nykaa and other IPO listings? Check how much tax you need to pay – The Financial Express

Clipped from: https://www.financialexpress.com/money/income-tax/made-money-from-nykaa-and-other-ipo-listings-check-how-much-tax-you-need-to-pay/2373543/

Income Tax on IPO Listing Gains: Several investors have made money from IPO listings this year.

income tax on profit from ipo listingRepresentative image

Income Tax on IPO Listing Gains: Several investors have made money from IPO listings this year. Since many IPOs listed at a premium, investors were looking at booking profits to make some good money in a quick time. And, with the exception of PayTM share listing, investors were not much disappointed with other IPOs.

For example, Nykaa IPO made many crorepatis. Suppose, Nykaa shares were listed at Rs 2018 each. Even if an investor had applied for 100 shares of Nykaa at Rs 1125 each and sold the shares on listing after allotment, s/he would have gained Rs 2,01,800-Rs 1,12,500 = Rs 89,300. This income is considered capital gain under the Income Tax rules.

Is there a separate tax rule for listing gains from IPO?

No. There is no separate rule for listing gains from an IPO.

According to Abhishek Soni, co-founder and CEO, Tax2win, tax rules for listing gains from an IPO are the same as tax rules on capital gain/loss from the sale of shares.

“There is no separate concept for taxation of listing gains/loss of shares, same provisions of capital gain/loss on sale of shares are applicable,” Soni told FE Online.

“If the shares allotted in the IPO are sold within 12 months of holding then the realized gain/loss will be considered as short-term capital gain/loss and it will be taxed at 15%. If the investor sells the shares after one year then it will be qualified as Long term capital gain and it will be taxable at 10% if the gain amount exceeds Rs. 1 lakh. Long-term capital gain up to Rs. 1 lakh is not taxable,” he added.

ALSO READ | Made money from US stocks? Check rules to report it in Income Tax Return

Taxpayers are required to disclose the gain/loss from IPO listing in their Income Tax Returns accordingly.

As per the income tax rules, short term capital loss can be set off against short term/long term capital gain. If a taxpayer is unable to set off short term capital loss this year, then he/she can carry it forward for up to 8 years if filing ITR this year.mail logo

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