Holding-Period Rules for Unlisted Shares
For unlisted shares, the long-term holding period is 24 months. Sell within 24 months and the gain is short-term, taxed at your slab rate. Sell after 24 months and it's long-term, taxed at a flat rate.
Compare this with listed shares (LTCG threshold 12 months) and you'll see why timing matters, exiting unlisted holdings just before 24 months can dramatically increase your tax bill.
Post-Budget 2024 Tax Rates
Budget 2024 made significant changes that affect anyone trading unlisted shares:
- Long-term capital gains on unlisted equity: 12.5% (down from 20% with indexation, for transactions on or after July 23, 2024).
- Indexation benefit removed for transactions after the cutoff date.
- Short-term gains continue to be taxed at the investor's slab rate.
A Worked Example
Suppose you bought ₹50 lakh of NSE unlisted shares in 2022 and sold them for ₹1.2 crore in March 2026. Your capital gain is ₹70 lakh, held for over 24 months, long-term. Tax = 12.5% × ₹70 lakh = ₹8.75 lakh.
The best tax planning happens at entry, not exit. Decide your holding period before you decide your ticket size. Anjali Verma, Head of Compliance
Filing and Documentation
Capital gains from unlisted shares must be reported in your ITR under Schedule CG. Keep transaction proofs, demat statements, and contract notes for at least eight years. If you hold AIFs, the fund will provide a Form 64C statement annually summarising your share of pass-through income.