This transaction is regarded as transfer

 

Fair market value of equity shares will be the full value of consideration in this case

 

Hence Capital gain will be imposed 2 times

  1. On Conversion of preference shares into equity shares
  2. On Sale of Equity Shares

 

Conversion of preference shares into equity shares  - Special Cases

 

  1. Income Tax
  2. Income from Capital Gains
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Davneet Singh's photo - Teacher, Computer Engineer, Marketer
Davneet Singh
Davneet Singh is a graduate from Indian Institute of Technology, Kanpur. He has been teaching from the past 8 years. He provides courses for Maths and Science at Teachoo. You can check his NCERT Solutions from Class 6 to 12.