Is it beneficial to sale shares on listing date to reap listing gains ??

 Is it beneficial to sale shares on listing date to reap listing gains ??

 

Not always …take this real life example

 

You applied for and were allotted (on July 15 2021) , 13 lots of shares of Clean Science Technology  Each lot contains 16 shares and price band of Rs. 900 per share.

 

So your total shares are 16 x 13 = 208 shares and

Total Investment is Rs. 900 x 208 = Rs. 187200

 

Now on Listing day  (July 19) share price was listed @ Rs. 1785 per share and you sold all shares on listing day . so your sale Value is Rs. 1785 x 208 shares = Rs. 371280

 

Your Gain = Rs. 371280-187200= Rs. 184080

 

Since you held the shares for less than 12 months , such gains will be treated as Short Term Gains (STCG) and will be Taxed @15% +4% cess ,  so total tax = Rs. 28716 and your net gain = Rs. 184080-28716=Rs. 155363

 

Gain per share = Rs. 155363/208 =Rs. 747

 

Now suppose you will sell  the shares on  16^th July 2022 (more than 12 months) and on that day share price will be  same Rs. 1785 per shares .

 

so your gain is  same  Rs. 184080

 

But  since   you have held the shares for more than 12 months gain will be treated as Long Term gain (LTCG) and in LTCG gain upto  1 lakh is not taxable and above it is taxable @10%+4%(cess) , so total tax will be Rs. 8744 only and net gain =175336

 

So gain per share =Rs. 175336/208=Rs. 843

 

Plus you may also get dividend . Even if dividend is assumed as Rs. 10 per share your dividend will be Rs. 10*208= Rs. 2080

 

So it is not always beneficial to sale the shares on listing day   .