Tips to save IPO listing gains tax!
In the years 2023 and 2024, many IPOs brought huge earnings for the investors. But tax also has to be paid on this! What is the tax rule on booking listing gains from IPO? How can tax liability on listing gains be reduced? How will the tax be calculated on selling IPO shares?
The Specified Undertaking of the Unit Trust of India (SUUTI) has offered to sell 1.95% in Axis Bank through offer for sale (OFS).
SUUTI may sell up to 5.8 crore shares at the floor price of Rs 680 per share, and this will help the government raise up to Rs 3,949.34 crore.
“The seller proposes to sell up to 3,60,00,000 equity shares of the company, (representing up to 1.21% of the total issued and paid up equity share capital of the company as on March 31, 2021), on May 19, 2021, (T day) (for non-retail investors only),” Axis Bank said in a regulatory filing.
Retail investors and non-retail investors, including those who choose to carry forward their unallocated bids will be able to participate on May 20, (T+1 day), and there would be an option to additionally sell 2,20,78,568 equity shares, representing 0.74% of the total issued, subscribed and fully paid-up equity share capital.
Shares of Axis Bank on Wednesday were trading at Rs 707.65, marginally lower by Rs 4 or 0.56% from its previous close.
What is Offer for Sale – OFS?
An Offer for Sale is a simpler method wherein promoters in public companies can sell their shares and reduce their holdings in a transparent manner through the bidding platform for the Exchange. The OFS segment was earlier allowed only for the Promoters/Promoters’ Group Entities of listed Companies, to act as ‘Sellers’ to dilute/offload their holding to achieve a minimum public shareholding of 25%. Now, however, the segment has been extended to non-promoters of eligible companies holding at least 10% of the share capital of the company.
What is the Floor Price?
Sellers have to provide a floor price on T-2/T-1 day (T being day of OFS). The floor price is the price at and above which an investor can place their orders.
How to apply for OFS?
You would need a demat and trading account to invest in an OFS. Under the retail category, an investor can place bids for up to Rs 2 lakhs.
One can bid through your trading portal if you have an online account. To apply for OFS you simply have to log in – click on IPO/OFS option – select OFS – apply.
For the offline mode on placing bids is possible with the help of a dealer. An investor can place orders at or above the floor price. This is the price that sellers would need to provide.
No documents are needed for bidding. You just require to provide the price you are willing to pay and the number of shares.
Bids for OFS can be placed between 9.15 am to 2.45 pm, modification of orders in OFS is not allowed.
In case the OFS order gets rejected from the exchange for any reason, the bid will not go through.