How Are Unlisted Shares Taxed in India? Capital Gains Explained

The popularity of unlisted stocks in India is rising, with investors increasingly exploring nse unlisted shares, private startups, and high-growth companies before their IPO. While the potential for profit is high, understanding taxation on unlisted equity shares is crucial to avoid unexpected tax liabilities. Let’s break down how capital gains tax applies to unlisted shares in India, with clarity on short-term and long-term gains.

🔍 What Are Unlisted Shares?

Unlisted shares are those not traded on stock exchanges like NSE or BSE. These include companies like NSE unlisted, HDB Financial, OYO, and Chennai Super Kings. Investors typically buy unlisted shares through private deals, intermediaries, or unlisted share platforms.

📌 Taxation on Unlisted Shares in India

Unlisted shares fall under the category of capital assets. The taxation depends on the holding period:

1. Short-Term Capital Gains (STCG)

·        If you buy unlisted stocks and sell them within 24 months, any gains are classified as short-term capital gains.

·        These are taxed as per your income tax slab rate, which could range from 5% to 30% depending on your total income.

Example: If you purchased nse unlisted share in January 2024 and sold it in June 2025, gains would be short-term and taxed at your applicable slab.

2. Long-Term Capital Gains (LTCG)

·        If the holding period exceeds 24 months, it’s classified as long-term capital gains.

·        LTCG on unlisted equity shares is taxed at a flat rate of 20% with indexation benefit.

·        Indexation adjusts the purchase price for inflation, thereby reducing your taxable gains.

Example: You bought Chennai Super Kings shares in 2020 and sold in 2025 — you’ll pay 20% tax on indexed gains.

💼 What About Gifts and Inheritance?

If you receive unlisted shares as a gift or inheritance:

·        Gifted shares (from a relative) are not taxed at receipt.

·        Capital gains tax applies only when you sell the shares. Your holding period includes that of the previous owner, which is important for LTCG eligibility.

📄 Reporting and Compliance

·        All unlisted equity shares must be disclosed in your ITR under “Schedule AL” (Assets and Liabilities) if your income exceeds ₹50 lakh.

·        Provide acquisition cost, date of purchase, and sale details.

·        Always keep proof of purchase as unlisted shares price list is not tracked publicly like NSE/BSE.

⚠️ Key Points Before You Buy Unlisted Stocks

1.     Check the valuation: Refer to updated unlisted shares price list before investing.

2.     Understand lock-in periods: You may face limited liquidity.

3.     Plan exits wisely: Tax treatment differs for IPO exit vs. private resale.

✅ Conclusion

While buying unlisted shares like NSE unlisted share or startup equity offers early-stage growth potential, tax implications can significantly impact your returns. Knowing the difference between STCG and LTCG, using indexation benefits, and proper ITR disclosure can help you stay compliant and optimize your gains.

Always consult a financial advisor or tax expert when dealing with unlisted stocks to ensure a smooth and tax-efficient investment journey.