I have inherited shares from my father after his death. Many of these shares had been purchased by him some 15-20 years back and the purchase price is not known to me. I have following queries when I sell these shares : 1) Will my purchase cost be taken as NIL or can I use the price which my father paid as my purchase price 2) If yes then do I have to retain them for 1 year for claiming Long Term Gain/Loss 3) For shares whose purchase value is not known can I ONLY use FMV as on 30/1/2018 for calculating the gain or loss

Ans: As per Indian Income Tax laws, when you inherit shares from your father, the cost of acquisition of such shares will be deemed to be the cost at which your father had acquired these shares. This cost is commonly known as the 'cost of acquisition' or 'purchase price'.

So, to answer your first question, you can use the price at which your father had purchased the shares as your purchase price.

Regarding your second question, the period of holding of the shares will be counted from the date of acquisition by your father. Hence, if the shares were purchased by your father 15-20 years back, and you sell them after holding them for more than 1 year from the date of inheritance, you would be eligible for long-term capital gains tax benefits.

Regarding your third question, if the purchase value of shares is not known, then the cost of acquisition for the purpose of computing capital gains will be the fair market value (FMV) of the shares as on 31st January 2018, which was the date of introduction of the tax on long-term capital gains on equity shares. This FMV will be considered as the cost of acquisition for the purpose of calculating capital gains.

It is important to note that if you sell shares within one year of acquisition, you would be liable to pay short-term capital gains tax on the profits made, whereas if you sell shares after one year of acquisition, you would be liable to pay long-term capital gains tax on the profits made. The tax rate for long-term capital gains tax on equity shares is currently 10% (if the gains exceed Rs. 1 lakh in a financial year) without indexation benefit or 20% with indexation benefit.