Tax implication on SEBI IPO Reallocation Payment

Q. – In April 2010, I received payment through ECS, through TSR Darashaw, as payment for SEBI IPO Reallocation Amount, as SEBI identified me as an unsuccessful applicant in one or more IPOs covered under inquiry.
Pls. advise, what are the tax implications, on this payment?
Is it to be considered along with normal income or LTCG / STCG?
Pls. advise,

Pratik N. shah

Ans. – Dear Pratik, In my view the IPO refund money u r referring to u should be categorize as Income from other sources & should be added to ur income from all sources & should be taxed accordingly.

The reasons –

1. it’s not ur salary income]
2. It’s not interest income
3. It’s not capital Gains, as no shares were alloted to u & no profit booking later on those shares
4. It’s not ur income from business

As the money received by u does n’t fall in the above categories, the only left option is income from other sources.

I hope this ‘ll clear ur as well as other’s doubt.



2 Responses to Tax implication on SEBI IPO Reallocation Payment

  1. vinothraj says:

    Sorry to bump up an old thread, but just trying to get clairty here. Please correct me if i’m wrong.

    If the IPO refund includes any INTEREST component, then that INTEREST portion alone would have to be declared under Income From Other Sources.
    Am i correct?

    • ashalanshu says:

      Dear Vinothraj, yes interest earned from anywhere is taxable unless it’s declared tax free (PF, PPF, Tax free bonds). Even the interest received from delay in tax refund is taxable.



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