Computation Of ‘Holding Period of an Asset’ for Computing Capital Gain [Explanation 1(i) to Section 2(42A)]

1. The period of Holding of an Asset [Explanation 1(i) to Section 2(42A)] :

CaseExclusion / Inclusion of Period
(i) Shares held in a company in liquidationExclude the period subsequent to the date of liquidation
(ii) Property acquired in any mode given under section 49(1) (e.g. by way of gift will, etc.)Include the holding period of previous owner also.
(iii) Shares in an Indian Amalgamated Company acquired in a scheme of AmalgamationInclude the holding period of shares in the Amalgamating Company by the Assessee.
(iv) Shares in Indian Resulting company acquired in case of demergerinclude the holding period of shares in the Demerged Company by the Assessee
(v) (a) Trading or clearing rights of recognised stock exchange pursuant to its demutualisation or corporatisationInclude the period for which the person was a member of the recognised stock exchange in India
(b) equity shares in a company acquired by a person pursuant to the demutualisation or corporatisation of recognised stock exchangeInclude the period for which the person was a member of the recognised stock exchange in India
(vi) Capital asset, being a unit of a business trust, allotted pursuant to transfer of share or shares as referred to in section 47(xvii)Include the period for which the share or shares were held by the assessee.
(vii) Unit or units, which becomes the property of the assessee in consideration of a transfer referred to in section 47(xviii)Include the period for which the unit or units in the consolidating scheme of the mutual fund were held by the assessee
(ix) Share or debenture of a company, which becomes the property of the assessee in the circumstances mentioned in section 47(x) of the Act. (le. conversion of bonds or debentures into shares or debentures of the same_company)Include the period for which the bond, debenture, debenture-stock or deposit certificate, as the case may be, was held by the assessee prior to the conversion.
(x) In the case of a capital asset, being equity shares in a company, which becomes the property of the assessee in consideration of a transfer referred to in section 47(xb) (i.e. conversion of preference share into equity share)Include the period for which the preference shares were held by the assessee
(xi) In the case of a capital asset, being a unit or units, which becomes the property of the assessee in consideration of a transfer referred to in section 47(xix) (i.e. transfer of units held in the consolidating plan of a mutual fund scheme to consolidated plan of the scheme).Include the period for which the unit or units in the consolidating plan of a mutual fund scheme were held by the assessee

2. Holding period in case of Shares or any other Security [Explanation 1(i)(e) and (f)]

The period of Holding , in the following circumstances will be computed as under :

1.Right to subscribe to shares or any other securities(may be called as financial assets subscribed to by the assessee on the basis of right to subscribe to such financial assets.The period shall be reckoned from the date of allotment of such financial asset.
2Right to subscribe to share or any other securities acquired by a person in whose favour the right has been renounced by the existing holder.—do——
3Period of holding of the right by a person who has renounced the right,The period shall be reckoned from the date of offer of such right by the company or institution to the date of renouncemern, which in normal circumstances will be short-term.
4Period of holding of a financial asset allotted without any payment and on the basis of holding of any other financial asset e.g. bonus shares.The period will be reckoned from the dare of allotment of such financial asset (not from the date of allotment of the original shares).
5.Period of holding of specific security or sweat equity shares allotted or transferred, directly or indirectly, by the employer free of cost or at a concessional rate to his employees (including former employees).The period shall be reckoned from the date of allotment or transfer of such specific security or sweat equity share.
6.Share or shares of a company, which is acquired by the non-resident assessee on redemption of Global Depository Receipts referred to in section 11 5AC( 1 )(b)The period shall be recknoned from the date on which a request for such redemption was made

Leave a Reply

Your email address will not be published.