Equity shares are one of the primary holdings present in any holder’s portfolio. Signifying a capital gain or loss at the time of its sale, such stocks play a crucial role in adding positive factors for taxation functions.

Similarly, investing your capital over unlisted shares is a high-risk trade. Here, you might either end up in huge profits by securing a company’s share at a cheaper price before it is offered as an Initial Public Offering. Or, it might also result in turning into a negative balance as soon as it is listed. 

However, when compared to the risk probability carried out by listed shares, unlisted shares are at a lower risk due to their partial exposure in the market. 

In contrast, lack of sufficient liquidity can also prove to be a significant problem for the investors of unlisted shares. They might end up losing a part of their capital when such shares are released at a cheaper price. 

Types of Capital Gain on Sale of Unlisted Shares

Since unlisted stocks don’t have a valid presence in any of the recognized stock exchanges, the companies don’t comply with rules of paying STT (Securities Transaction Tax). Therefore, the period of holding such shares lasts only over 24 months. Gains over such shares are divided into:

  1. LTCG: The gain or loss calculated on unlisted stock held for over 24 months is called Long Term Capital Gain (LTCG) or Long Term Capital Loss (LTCL).
  2. STCG: Gains or loss calculated when an investor sells their unlisted stock within 24 months is called a Short Term Capital Gain or Short Term Capital Loss (STGL).

Income Tax on Unlisted Shares

The Income Tax on trading with unlisted shares has been kept similar to the tax treatments in other capital assets that are owned by an investor. Here’s a detailed overview of the different rates of income tax that are implied on the sales of unlisted shares of either Foreign or Domestic companies.

LTCG – 20% including the indexed rate of the shares

STCG – Tax included as per the slab rates set by the government 

However, it should be noted that in case the investor is a Non-Resident, the long-term capital gain that has been accumulated over the holding period, will be charged at 10%, excluding the indexation.

Commonly Asked Questions Around Tax Implications for Unlisted Shares 

Which ITR should be filed for accounting capital gains for unlisted shares?

For traders dealing with unlisted shares, they need to file the ITR 2 (ITR for recording gain in the capital), while filing for their returns in the income tax portal. 

What is the Due Date For Filing My Capital Gains for Unlisted Shares?


For the accounting year 2019-20

31st July – traders who don’t need to do a thorough audit of their tax

30th September – for traders who are applicable for a tax audit of their return


For the accounting year 2020-21 onwards

31st July – traders who don’t need to do a thorough audit of their tax

31st October – for traders who are applicable for a tax audit of their return


How Do I Carry Forward Loss on Sale of Unlisted Shares

There are two ways in which investors can carry forward the losses of their unlisted shares, they are:

  • Investors are allowed to set off their Short Term Capital Loss against both LTCG and STCG by carrying forward their losses for over 8 years. They can later set it off against LTCG and STCG.


  • Investors are allowed to set off their Long Term Capital Loss against the LTCG. In this instance, they are allowed to carry forward their losses for over 8 years, only to be set off against LTCG only.


Know Your Implications Correctly!

With this, we hope that you now have a clear idea about the tax implications around unlisted shares. Remember, while it might be one of the best mediums to gain capital over the short term, they come with their own shortcomings. 

Beware of the different unlisted shares that you pick up from the grey market. At times, they bear more loss than profit.