Lakshminarayanan, 55 years of age is employed with an MNC. Although he is not an ardent stock market player, he holds some stocks which were inherited from his father. His equity portfolio included a chunk of LVB shares. Announcement by the Government of India and RBI in Nov 2020 regarding the LVB merger with DBS and the de-listing of LVB shares was a blow to Lakshminarayanan’s portfolio. It was quiet depressing to see a huge chunk of asset (LVB shares) wiped out of his portfolio. Can Lakshminarayanan take the benefit of carry forward / set off of this loss against his capital gains?
Stocks and shares are Bonsais
Investment in stocks and shares is like nurturing and growing a “bonsai” plant. You cannot sow the seeds and expect it to grow and take care of itself. You need to keep an eye on what happens to it. Any positive or negative changes in the market needs to be carefully evaluated and taken advantage of. Once the time to act lapses, you miss the opportunity.
LVB Delisting – how do you take advantage?
In case of LVB shares, announcement from RBI stated that the entire share capital shall stand written off on the appointed date. This means the shares became worthless. And hence the entire investment (cost of purchasing LVB shares) would become a capital loss. Capital losses can be set off against current year capital gains or can be carried forward and set off against future capital gains. In order to do this the assessee needs to ensure that the losses are declared in the ITR for it to be set off / carried forward.
Don’t miss the bus!
While a common shareholder cannot do much in such circumstances, once needs to be careful about not missing the opportunity such situations bring along.
Caution
Delisting of shares in common parlance means that the stock cannot be actively traded in the stock exchanges. But whether all such de-listed shares will bring along such opportunity of carry forward / set off of losses is a question which needs to be carefully analysed on a case to case basis.
How can we help you?
Various clauses from the Income Tax Act may be simplified in online contents. But most of the time, it requires professional help in identifying suitable route for specific instances. Similar to nurturing and taking care of personal health, it is important to also keep a tab on one’s financial health. We at Chockalingam Unnamalai & Associates, can help you understand the pros and cons of various choices you make in the context of personal taxation. You can bank on us for a stress free tax filing and related compliances.
Call us at +91 73050 56628 or drop a mail to frontoffice@onesourcevault.com
ITR Filing – Why choose us?
Effective compliance is a key pillar for growing your finances and career/business. Tax compliance in particular could be cumbersome and at times very stressful. We help you to navigate through the maze of changes to tax laws with ease.
We understand and operate on the principle – “Time is money”. We have a reasonable turnaround time (TAT) which ensures timely tax compliance.
We understand the importance of data security and hence operate in a data-secure environment. Onboard us and experience certainty and value for money!
With a 15 year experience in the Industry, Chocksi decided to commence his practice after the “Entrepreneurial Bug” bit him ! He is the Founder Partner of Chockalingam Unnamalai & Associates, Chartered Accountants.
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