What are Right Shares


Right shares are shares which an existing shareholder is able to purchase at a price which is normally less than the market price.

The shareholder has two options

     (a) He can either purchase the shares by paying the price

     (b) He can sell the right entitlement (renounce the right in  favour of someone else)

When  are Right Shares Taxable ?

It is taxable when right shares are actually sold


What is Cost of Acquisiton

Type of share


Original Shares held

Cost remains the same

Right shares (actually acquired)

Amount paid for purchases for the share is COA

Right shares (entitlement sold)

COA is nil



Treatment for Person purchasing the Right Entitlement 


Amount paid for acquiring entitlement


Amount paid for purchasing the shares. 

  1. Income Tax
  2. Income from Capital Gains

About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 11 years. He also provides Accounts Tax GST Training in Delhi and Pune.