India leads global IPOs, raising US$ 4.3 billion in Q3 2024: Tax impact decoded

India has emerged as the global leader in the initial public offering (IPO) market, commanding a 36% share of total listings in Q3 2024, surpassing the United States, which held a 13% share. The country witnessed its highest quarterly IPO listings in the past two decades, with 27 IPOs recorded in the third quarter, marking a 29% increase from Q3 2023. The funds raised totalled US$ 4.27 billion (Rs. 36,027 crore), a 142% increase from the previous year. Compared to the previous quarter, the funds raised in Q3 2024 saw a 115% rise, with the number of deals increasing by 108%. Notable IPOs during the quarter included Bajaj Housing Finance, Ola Electric Mobility, and First Cry. 

While IPOs continue to offer significant returns, investors should be mindful of the tax implications on their gains. According to Cleartax, the taxation of IPO profits depends on the holding period of the shares. Short-term capital gains (STCG) arise if the shares are sold within 12 months of allotment, with profits taxed at 20% plus cess. Long-term capital gains (LTCG) apply to shares held for over one year, with gains up to Rs. 1.25 lakh (US$ 1,481) being tax-free. The tax rate for gains exceeding this limit is 12.5% plus cess. Furthermore, if a short-term capital loss occurs, it can be offset against other capital gains. In contrast, long-term capital losses can only be offset against long-term capital gains. Losses not utilized within the year can be carried forward for up to eight years, provided the income tax return is filed for the relevant year. 

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.