This is on account of the fact that the redemption proceeds of bonus preference shares amounts to dividend, which is now taxable in your hands, along with the dividend on the preference shares. Your calculation, therefore, goes haywire on account of the tax.
Why do companies want preference shares?
Preference shares provide a fixed income from the dividends which is not guaranteed to ordinary shareholders. Companies issue preference shares to raise funds without diluting voting rights. This is the trade-off to be made for getting an assured income.
Can preference shares be written off?
Fully paid-up preference shares can only be redeemed. Preference shares can be redeemed only out of the profits available for distribution to its shareholders or out of proceeds of fresh issue of Shares solely for the purpose of funding the redemption of the preference shares.
Can we transfer shares from one broker to another?
An investor can move from one stock broker to another for various reasons like the services offered, ease of doing transactions, brokerage or research services offered.
Can shares be transferred online?
Intra-depository transfer: If the transfer is within a depository itself, it’s called intra-depository transfer. 2. Inter-depository Transfer: This is valid when the transfer is from one depository to another. All shares can be transferred either manually or online.
Do you pay tax on capital gain on transfer of shares?
Capital Gain on Transfer of Shares. Profit or gain arising on transfer of shares (considered as an investment not a business by assessee) is chargeable to tax under the head ‘Capital Gains’.
Is there a way to transfer shares tax free?
Transfer shares tax free with Gift Hold-Over Relief The Gift Hold-Over Relief provides for an easy and tax free way to give away your shares as a gift to another person (not to a company!). The Hold-Over Relief does not exempt any of the chargeable gain, but instead postpones any tax liability.
Is the transfer of shares at value less than FMV taxed?
The measure to curb transfer of shares at value less than FMV has been introduced with the same intent. However, due to the double taxation effect, Sec 50CA and Sec 56(2)(x) provisions, while are anti- abusive, are also difficult for tax-payers to bear. Further]
Do you have to pay tax when you sell shares?
Selling your shares In general, capital gains tax will need to be paid when you sell (or give away for free) an asset (such as shares). The amount of tax depends on many factors such as your income, the amount of capital gains that you made from the transfer of shares during a tax year, etc.
