Inherited Shares Through Will: Do I Need to Pay Capital Gains Tax?

Ans: You can deduct the purchase cost of shares which your father had paid

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.

Ans: First the shares have to be transferred to your name and then you can sell the shares and pay tax
Yes tax has to be paid if any

Ans: 01. In absence of exact figures, it is not possible to calculate your Capital Gains Tax. However, following details may help you to assess your tax liability.
02. Under present provisions of Income Tax Act, you may opt any of the options (Long Term
Capital Gains), as under :
(a). Tax Rate 12.50% without indexation or
(b). Tax Rate of 20% with Indexation.
03. You may calculate your tax liability under both options & may opt for the tax regime, where tax liability is minimum.
04. Most welcome for any further clarifications. Thanks.