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When a founder sells shares in a Pvt Ltd startup:
Startup ecosystem · M&A
Acquisition tax: how an exit is taxed for founders
Updated . Every paid answer is checked by a CA. Free AI answers are labelled until a CA verifies them.
Provisions
IT Act, Sec 45, 48 | Budget 2024 CG rates
Analysis
LTCG (held 24+ months for unlisted shares): 12.5% without indexation. No ₹1.25L exemption (that's only for listed equity). STCG (held less than 24 months): Taxed at slab rate, up to 30.9%. Cost of acquisition: For founders who got shares for consideration of ₹1, cost = ₹1 per share. For ESOP shares, cost = FMV on exercise date (the perquisite was already taxed). Rollover relief (Sec 86, Income-tax Act 2025, old Sec 54F): If you reinvest LTCG proceeds from a startup exit into a residential house within 2 years, the LTCG is exempt. Max 1 house.
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