The proposed amendment seeks to address a lacuna in the ...

Budget: The amendment plugs a gap in computing cost of acquisition for equity shares transferred via OFS in IPOs. For unlisted shares on 31/1/18, the cost is calculated by applying Cost Inflation Index for FY 2017-18 to acquisition cost.

Notes     Bill

July 28, 2024

The proposed amendment seeks to address a lacuna in the computation of cost of acquisition under clause (ac) of sub-section (2) of section 55 of the Income Tax Act, 1961 for equity shares transferred under an Offer for Sale (OFS) as part of an Initial Public Offering (IPO) process. It aims to specifically provide that in cases where equity shares are not listed on a recognized stock exchange as of January 31, 2018, or became the property of the assessee through a transaction not regarded as a transfer u/s 47, but are subsequently listed after the date of transfer through an OFS, the "fair market value" for determining the cost of acquisition shall be calculated by applying the Cost Inflation Index for the financial year 2017-18 to the cost of acquisition. This amendment is proposed to have retrospective effect from April 1, 2018, applicable from the assessment year 2018-19 onwards.

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