In conjunction with the merger between HDFC and HDFC Bank, I am entitled to fractional shares of HDFC Bank Limited. How and when will the transaction be taxed? How do I report fractional entitlement on the ITR’s Schedule 112A, which does not accept fractional quantities of shares?

In accordance with Section 47 of the Income Tax Act, the allotment of shares upon the merger of two companies is not considered a transfer; therefore, there are no tax implications for the shares of HDFC Bank Ltd. that were allotted to you in exchange for your shares in HDFC Ltd. When determining whether the profits are short-term or long-term capital gains, the combined holding period of HDFC Limited and HDFC Bank Ltd. must be considered upon the sale of the merger-allocated shares. The cost incurred to acquire HDFC Ltd. shares must be accounted for when determining the cost of HDFC Bank shares allocated, and the cost of HDFC Bank Limited shares sold must be calculated accordingly.

If the shares were acquired prior to February 1, 2018, the closing price of HDFC Ltd. shares on January 31, 2018 will be considered the cost of the HDFC Ltd. shares, provided that STT is paid on both the purchase and sale of the shares. Beyond the initial rupee one lakh, long-term capital gains on listed shares and equity mutual funds are taxed at 10% without indexation. 15% is the fixed rate applicable to short-term capital gains.

Regarding money received for fractional entitlement of shares, since the fractional shares are not sold by you and STT is therefore not paid on such fractional shares, the money cannot be taxed under Section 112A, which applies if STT has been paid. In my opinion, the long-term capital gains on such fractional shares would be taxed at a rate of 20% after applying indexation to the proportional cost of fractional shares relative to the money you received. Please note that you must apply indexation to the actual cost of the purchase. In my opinion, the grandfathering benefit of taking the closing price on January 31, 2018 if the shares were acquired prior to February 1, 2018 is not available in this scenario.

If the shares of HDFC Limited were held for less than a year, the profit from the sale of fractional shares of HDFC Bank Limited would be considered short-term capital gains and taxed at the applicable slab rate.

Also Read : Stock Market Today: Top 10 things to know before the market opens

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This is on top of the previous divestiture of a 1% stake in NSDL that took place through definitive agreements in December of the previous year and met the criteria for being considered significant. The Bank’s stake in NSDL was 8.95% at one point. In order to raise capital through the initial public offering (IPO), the market infrastructure organization NSDL, which is registered with SEBI, submitted its draft prospectus to the markets regulator yesterday. The financial and securities markets can take advantage of NSDL’s comprehensive selection of goods and services. After the Depositories Act was passed in 1996, the National Securities Depository Limited (NSDL) was a forerunner in the dematerialization of securities in India. The organization is the most significant depository in India as of the month of March 2023 in terms of the number of issuers, the number of active instruments, the market share in the demat value of settlement volume, and the value of assets held under custody.

The offer includes an over-the-counter sale of up to 57,260,001 equity shares. IDBI Bank will be offloading 22,220,000 equity shares as part of the OFS, while NSE will be selling 18,000,001 equity shares, Union Bank of India will sell up to 5,625,000 equity shares, and State Bank of India will sell up to 4,000,000 Equity Shares. Among the other shareholders who are selling their shares is the Administrator of the Specified Undertaking of the Unit Trust of India.

The offer reserves a certain number of equity shares for subscription by employees who meet the requirements.

It is possible that NSDL and the selling shareholders, after consulting with the book-running lead managers, will provide a qualified employee bidding in the employee reservation portion with a price reduction on the offer price.

It is proposed that the shares of the company be listed on the BSE.

ICICI Securities, Axis Capital, HSBC Securities and Capital Markets (India), IDBI Capital Markets and Securities Ltd, Motilal Oswal Investment Advisors Ltd, and SBI Capital Markets Ltd are the book-running lead managers for the issue. SBI Capital Markets Ltd is also a lead manager for the offering.

Read Also : Yatharth Hospital & Trauma Care raises Rs 120 crore in a pre-IPO transaction.

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Bank FD vs Stock Market

If you are planning to invest your money somewhere. So first of all options like Stock Market or Fixed Deposit will come in front of you. We are going to tell you about some such banks, which have made investors rich by owning more bank shares than their fixed deposits (FD). With this news, you can make your investment plans better. Also, you can invest in the right place.

Investing in the stock market is very risky, but if you are ready to take the risk, you can become a millionaire and a millionaire from a millionaire in a few months or years. Your money can be doubled. If you make a fixed deposit of your money in the bank for 7 to 30 days. So in this case you will get a maximum return of 3.5%. Means your 1 lakh rupees will become 103500 rupees after one month. On the other hand, if you invest 1 lakh rupees in the shares of these banks before 1 month, then your money can be up to 2.5 lakhs

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Bank fd vs bank shares

Let us tell you that, you can see the comparison of 1 month returns of shares and FDs of some public sector banks. Just like Uco Bank is paying 2.9 percent interest on fixed deposits for 7 to 29 days, the same bank’s stock has given a return of 145 percent in 1 month. Similarly, the Central Bank of India has given a return of 76 per cent to its equity investors during this period, while 3.25 per cent on FD. State Bank of India has given equal returns in both.

Return on Bank Shares (in %) Return on FD (in %)
UCO Bank 145 2.9
Central Bank Of India 76 3.25
Indian Bank 10.68 2.80
Indian Overseas Bank 77.58 3.25
Punjab National Bank 38 3.50
State Bank of India 3.00 3.00

Fixed Deposit (FD) Interest Rates: ICICI Bank Vs HDFC Bank Vs SBI Vs Kotak Mahindra Bank – NDTV https://t.co/rhdq0xEtGC I think that present situation is different. People have lost their confidence about banking work. So it is better to invest in share market.

— ALOKE KUMAR DAS (@ALOKEKUMARDAS10) February 20, 2018

Must take expert opinion

If you are going to invest money anywhere. Before this, you must take the opinion of a market expert. If you are going to invest money in shares, then you must keep in mind that it is not necessary that your money will always increase. Many occasions come when your money can also be drowned. Money does not sink in the same fixed deposit in the bank. You get decent interest.

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The biggest problem with the salaried class is that, when they need a huge amount, then they have to take a loan from a relative or a personal loan from a bank. Because they wait for the salary for a month, and then all the expenses in a few days as soon as the account is credited.

The post Extra Income Formula: Will not touch salary, earn separately equal to salary every month, understand maths appeared first on Republic Aeon.

IDBI Bank would continue its primary dealer business even if a foreign bank acquires majority stake and management control in the private sector bank, the finance ministry said on Tuesday.

As part of the primary dealer activity, IDBI Bank is involved in market making activities in respect of G-Secs, including T-bills. IDBI’s treasury actively participates in primary auction of government bonds.

In response to a query on the primary dealership activities undergoing change/getting impacted, where a foreign bank acquires more than 50 per cent shareholding and management control in the strategic sale, the Department of Investment and Public Asset Management (DIPAM) said, “There may not be any impact on the primary dealer business of the IDBI Bank.”

Primary dealers are RBI registered entities that buy and sell government bonds. They have the licence to buy government securities (G-secs) directly from the central bank and sell them to other buyers, thereby creating market for G-Secs.

The clarification is part of the supplementary responses to queries received from interested bidders for IDBI Bank. The first set of responses were released last month.

The DIPAM had then clarified that IDBI Bank will continue to operate as an ‘Indian private sector bank’ after its strategic sale even if the successful bidder is a foreign bank.

The government had on October 7 invited bids for privatising IDBI Bank and said that it along with LIC will sell a total of 60.72 per cent stake in the financial institution. The last date for putting in Expression of Interest (EoI) or preliminary bids is December 16.

The government and LIC together hold 94.72 per cent stake in IDBI Bank and have offered to sell 60.72 per cent stake in the bank. The successful bidder would be required to make an open offer for acquisition of 5.28 per cent of the public shareholding.

Interested bidders would have to clear RBI’s ‘Fit & Proper’ assessment and get security clearance from the government/home ministry in the EoI stage itself to be able to access IDBI Bank’s data room for due diligence

The DIPAM had earlier said that potential investors should have a minimum net worth of Rs 22,500 crore, must report net profit in three out of the past five years to be eligible for bidding for IDBI Bank.

Also, a maximum of four members would be allowed in a consortium. The successful bidder would be required to mandatorily lock-in at least 40 per cent of the equity capital for five years from the date of acquisition.

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