India Tax & Regulatory
Long-Term vs Short-Term Capital Gains on Share Sale
Unlisted Indian company shares held over 24 months qualify as long-term capital assets, taxed at a lower rate than short-term gains — materially affecting seller proceeds and negotiation leverage.
Buyer Example
Buyer negotiating with a promoter who has held shares of a Mumbai auto components company for only 18 months recognizes the seller faces short-term capital gains at slab rate rather than the lower long-term rate. Buyer uses this timing pressure to negotiate a lower headline price, knowing the seller's after-tax outcome is more sensitive to closing fast.