PAN of Unlisted Shares
Everything you need to know about PAN requirements and tax implications when investing in unlisted shares in India.
Why is PAN Mandatory?
PAN (Permanent Account Number) is a critical requirement for any securities transaction in India, including unlisted shares. SEBI and the Income Tax Department mandate PAN for all demat account holders, ensuring traceability and tax compliance for every share transfer.
PAN Requirements for Unlisted Share Transactions
Buyer Requirements
Valid PAN linked to their demat account. Self-attested PAN copy must be provided to the counterparty for KYC verification.
Seller Requirements
Valid PAN linked to their demat account. Seller must declare capital gains from the sale in their Income Tax Return (ITR).
Tax Implications
| Holding Period | Tax Type | Tax Rate |
|---|---|---|
| Less than 24 months | Short-Term Capital Gains (STCG) | As per income tax slab |
| More than 24 months | Long-Term Capital Gains (LTCG) | 20% with indexation |
Note: If the company later gets listed through an IPO, the holding period and tax treatment may change based on the listing date. Always consult a tax advisor for your specific situation.
Key Compliance Points
- PAN must be linked to Aadhaar for valid filing
- All off-market transfers are reported to the Income Tax Department
- TDS may be applicable on certain high-value transactions
- Capital gains must be computed based on the actual cost of acquisition
- Stamp duty is applicable at 0.015% for off-market transfers
Last updated: April 2026