Tax implications on delisting of tata motors adrs

1. Since it is a capital asset, the applicable capital gains tax have to be paid.

2. The value for computing the capital gains tax may be assessed as on the date you have acquired the shares 

3. Section 10 (38) of the Income Tax Act, 1961. As per this section, the long-term capital gains (LTCG) arising on sale of equity shares or units of an equity-oriented mutual fund on which Securities Transaction Tax (STT) is paid was exempt from taxation.  But this removed by introducing section 112A . Following the abolition of the exemption under section 10(38), the said section was established in Budget 2018. It is effective beginning with the fiscal year 2018-19. It provides for a 10% tax on long-term capital gains on listed stocks that surpass a Rs.1 lakh threshold. The schedule for Section 112A of the Income Tax Act, which requires the taxpayer to fill out the scripwise data of securities sold during the year, is included in the income tax form.

4. The above answer suits this question too.

5. When a new clause or policy is added to a law, certain persons may be relieved from complying with the new clause.

The concept of grandfathering in the case of LTCG on sale of equity investments works as follows:

A method of determining the Cost of Acquisition (COA) of such investments have been specifically laid down as per the COA of such investments shall be deemed to be the higher of:

• The actual COA of such investments; and
• The lower of-
  • Fair Market Value (‘FMV’) of such investments; and
  • the Full Value of Consideration received or accruing as a result of the transfer of the capital asset i.e. the Sale Price.

Further, the FMV would be the highest price quoted on the recognised stock exchange on 31 January 2018. 

In case there is no trading of the said asset in such stock exchange, the highest price on a day immediately preceding 31 January 2018 shall be considered to be the FMV. In effect, the taxpayer can claim the highest price quoted on the recognised stock exchange on 31 January 2018 as the COA and claim the deduction for the same. 

The computation mechanism has been further explained by way of the following examples

Capital Gain/ Loss = Sale Price – Revised Cost of Acquisition on 31.1.2018