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What are Unlisted Shares? How does it work?

Stock Market

Shitanshu Kapadia

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July 2, 2026

In case you have been interacting with Indian investors recently, then chances are high that at least one person would have talked to you about buying shares from a company “before it goes public”. The name of the pre-IPO fintech companies, popular e-commerce firms, or known private manufacturers will definitely be mentioned here. What we’re discussing in such cases is generally the world of investment in unlisted shares.

In this article, we will define the concept of unlisted shares, explain the procedure of trading in them, reasons behind some companies not going public for years, risks involved, their valuation, and taxation process in an easy-to-understand way.

What are unlisted shares precisely?

Any organization issuing shares divides its ownership into smaller units. If the ownership units get listed on an exchange, which, in the case of Indian stock exchanges, is either the BSE or the NSE, then the shares are known as listed shares. All one needs for buying and selling such shares is a demat account and trading application and they can execute trades instantly during the stock market hours.

Unlisted shares are quite different from this. They belong to companies whose stocks have not been listed on any stock exchanges. The fact that a stock is unlisted does not mean that the company is not legitimate or that it is unsuccessful because many unlisted companies have a lot of success and business behind them. It simply means that there has been no listing of these shares on a stock exchange yet.

As there is no role of an exchange in an unlisted share transaction, the process of trading these shares becomes quite different from conventional stock trading. There is no price discovery system, order matching system, and no certainty of a buyer or seller being available when you want one.

The Three Categories of Unlisted Companies

There are different types of unlisted companies and they can be sorted into three main groups.

Strictly private companies. These are all kinds of businesses from a family-owned manufacturing company to a rapidly developing start-up firm which has never issued its stocks to the general public nor plans to do it anytime soon. Stocks of these companies belong to founders, early employees and a few investors including angels and venture capital firms.
Companies getting ready for an IPO (pre-IPO companies). This is an advanced group of private firms which are going to go public and release an Initial Public Offering sometime in the nearest future. Since there is real expectation concerning the debut of these companies on the stock exchange, their stocks attract the biggest interest of investors who try to enter the game at the beginning.
Delisted companies. Delisted firms refer to those that traded previously in an exchange but later got delisted from the exchange due to various reasons, which include voluntarily, where the promoters buyout all public shares to make the firm private once again, or involuntarily, due to non-compliance with listing and accounting practices in the exchange.

How the Unlisted Share Market Really Works?

As the deal-making is not carried out at any centralized market place, it is useful for you to know the real mechanism of this process.

But Who Actually Owns These Shares?

The ownership of unlisted shares belongs to a relatively small circle of people: founders, ESOP shareholders (employees of the company who got stocks as a part of employee stock ownership plan) and institutional shareholders such as venture capital or private equity funds, as well as individual angel investors who contributed money to the company in its early days.

Though such companies do not need to fulfill the requirements of constant and ongoing disclosure imposed on listed companies, they cannot operate in a legal vacuum – they are obliged to adhere to provisions of the Companies Act, submit returns in accordance with the Companies Act to the Registrar of Companies from the Ministry of Corporate Affairs, to follow taxation laws and if applicable – to follow regulations of FEMA. In case of initial public offering, the rules of SEBI will apply.

Price Determination

This may well be the most significant mental change for someone accustomed to normal equity trading. In an exchange, the price of a share is determined through the competition of thousands of buyers and sellers in real-time. However, in an unlisted stock market, there is no such process. Rather, it is the process where a buyer and seller (with an intermediary sometimes involved) simply negotiate a price between each other.

In essence, two individuals could end up purchasing stocks of the same company on the very same day at a significantly different price depending on the negotiation, the desperation of the seller to get out or the urgency of the buyer to enter the deal. The factors that influence the price are the valuation of the company during its last round of funding, rumors of its planned initial public offering, investor appetite and scarcity of available stock, among others.

How does the Transfer Occur Practically?

Although these unlisted shares are not traded in any exchange market, they are kept in demat accounts, similar to the ones maintained by listed shares in depositories such as NSDL/CDSL.

Following is the simple transfer process:

Buyer and seller (through their broker) decide on the cost of the transaction and the number of shares to be traded.

The Share Purchase Agreement (SPA) is signed, which outlines the agreement between the parties.

Instructing their Depository Participant (DP) through Delivery Instruction Slip (DIS) or online facility, the seller requests to transfer the shares.

This transfer occurs directly from the seller’s demat account to that of the buyer. The off-market transfer happens when the transfer occurs outside of the exchange settlement system.

Once confirmed by the depository, the shares get credited to the buyer.

Conclusion

Indeed, trading in unlisted shares gives one an opportunity to invest in the exciting world of promising private companies at the early stages – but it comes with a completely different risk level compared to conventional stock market investments. With lower liquidity, reduced information flow, and pricing done through negotiations rather than on the market, investing in unlisted shares requires patience and thorough research much more than promptness and decisiveness.

NSE IPO – How NSE Makes Money beyond Trading Fees

News

Shitanshu Kapadia

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July 1, 2026

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NSE IPO is around the corner. If you are planning to invest in NSE IPO you must know that How NSE make money? It will actually help you in taking correct decision for IPO investment. NSE is largest exchange. If you look at NSE operations in detail – particularly those revealed as part of its IPO process – you’ll notice that NSE is far more than just an exchange platform for securities. It is rather an organization providing financial infrastructure services which additionally operates India’s biggest stock exchange.

Below is a brief description of how the other revenues are generated.

Charges For Trading and Transactions

With each transaction, regardless of whether it is stocks, a future contract, an options contract, or currency derivative, the exchange takes some money. With millions of transactions carried out daily, it soon becomes significant. Recently, trading options has been the main attraction at NSE. Investors like options due to their cheapness compared to the price of stocks and due to the mobile trading platforms which enable anyone to make an options trade within minutes. Also, weekly expiry of index options has promoted frequent trading, thus generating extra income for NSE.

Income Generated from Listing Fees Charged To Companies

All companies whose stocks are being listed and are to be traded on the exchange need to pay for the privilege. Usually, there is an initial listing fee when the company starts listing, followed by a yearly fee to keep the listing active. The income generated through such fees is not as significant as from the trading fees, but it is stable.

Clearing and Settlement Functions

The other side of buying stocks involves the assurance of getting the actual shares for the buyer and making the payment to the seller without any problems. The function is performed by NSE Clearing, which is a subsidiary of NSE. It controls the risk involved in each transaction that occurs – serving as a guarantor of the completion of the deal despite the failure of any of the parties to make the payment. The clearing process has turned into a considerable source of income.

Marketing Market Data

Each quotation, each price fluctuation, each order passed through the system produces information that becomes very useful. All brokers, banks, mutual funds, automated trading systems, and financial information providers pay for access to the market data feed either current or historical. This part of NSE’s functions is carried out by NSE Data & Analytics.

Licensing Its Indices

Most people have come across the name Nifty 50 regardless of whether they have made any investment using it or not. The management of the Nifty 50 and other indices like that is in the hands of NSE via the company NSE Indices Ltd. Every time a mutual fund or ETF wishes to follow Nifty 50, and any organization intends to use Nifty 50 as their benchmark, they have to make a licensing payment to NSE. Index based investment has been growing fast in India and now constitutes a regular revenue stream that is independent of daily transactions.

Co-location and Technology Services

It is important for high frequency traders and large institutions to have access to NSE’s server infrastructure as every millisecond counts. NSE offers rack rental in its data center known as co-location along with other services such as high-speed connectivity and other technology infrastructure. In addition, NSE Infotech Services offers wider range of technology solutions to the market participants.

Conclusion

Although the trading fees are still the biggest source of income for the NSE, the firm has also successfully developed other money-making activities related to its primary functions. The listing fees, clearing, data selling, index licensing, and IT infrastructure together make a complex business that is no longer a mere stock exchange but a financial backbone of the country’s entire capital market — generating a small amount of money from every point of interaction between the exchange and its users.

Being a high-quality business given its leadership position in all important market segments and diverse products, NSE is worthy of being a part of an investor’s portfolio. The company’s IPO suits more those investors who wish to be a part of the story of India’s financialization.

Foreign Income in ITR – Avoid These Mistakes

Incometax

Shitanshu Kapadia

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July 1, 2026

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Filing an Income Tax Return (ITR) has become more detailed than ever before. If you have earned money from outside India or own assets abroad, you cannot afford to ignore the reporting requirements. A small mistake while declaring Foreign income in ITR may seem harmless today, but it can invite tax notices, heavy penalties, delayed refunds, and even legal consequences later.

Many taxpayers wrongly assume that foreign income only applies to people living overseas. That’s not true. You may have received salary from a foreign employer while working remotely, earned dividends from US stocks, received rental income from a property abroad, or even earned interest from an overseas bank account. All these may need to be disclosed depending on your residential status and the provisions of the Income Tax Act.

What Does Foreign Income in ITR Mean?

Foreign income in ITR refers to income earned outside India that may need to be reported while filing your Income Tax Return.

Foreign income may include:

Salary received from an overseas employer
Interest earned on foreign bank accounts
Rental income from property located abroad
Dividends from foreign companies
Capital gains from selling foreign shares
Income from overseas business or freelance work
Pension received from another country
Royalties or consulting fees from foreign clients

Who Needs to Report Foreign Income?

Not everyone has to report foreign earnings in the same way.

Generally, you may need to disclose foreign income if you are:

Resident and Ordinarily Resident (ROR)
Holding foreign assets
Earning income from overseas investments
Receiving salary from foreign employers
Owning overseas bank accounts
Having foreign trusts or financial interests

However, individuals who qualify as Non-Resident (NR) or Resident but Not Ordinarily Resident (RNOR) may have different tax obligations depending on the source of income.

Disclosure Mistakes With Foreign Income in ITR

Treating Schedule FA as Optional

This has got to be the most common blunder out there. Schedule FA (Foreign Assets) isn’t some optional add-on—it’s mandatory for any resident individual holding foreign assets, whether or not those assets generated income during the year. People often think, “Well, my foreign account didn’t earn any interest this year, so there’s nothing to report.” Wrong assumption! The mere existence of the asset triggers a disclosure requirement.

Getting the Reporting Period Confused

Here’s a detail that catches people totally off guard. While India’s financial year runs from April to March, many countries (the US being a classic example) follow a January-to-December calendar year. When it comes to Schedule FA specifically, you report based on the calendar year ending before the relevant assessment year—not India’s usual timeline. Miss this nuance, and your entire foreign income in ITR disclosure could end up misaligned.

Using Random Exchange Rates

You’d think currency conversion would be the easy part, but nope. A lot of filers just grab whatever exchange rate shows up on a quick Google search and call it a day. The correct approach is to use the State Bank of India’s Telegraphic Transfer Buying Rate on the specified date. It sounds like a small technicality, but inconsistent rates can raise red flags during assessment.

Forgetting to File Form 67 for Tax Credit

If you’ve already paid tax on your foreign income in another country, India’s DTAA agreements are there to save you from double taxation. But here’s the catch—you have to file Form 67 before submitting your ITR, not after. Miss this step, and you might end up paying tax twice on income that should’ve only been taxed once. Frustrating, to say the least!

Assuming Small Amounts Don’t Matter

“It’s barely $30 sitting in an old account, why even bother?” This kind of thinking gets people into trouble more than you’d expect. The disclosure requirement for foreign assets doesn’t come with a “too small to care” exemption in most cases. Report it anyway—it’s simply not worth the risk.

Not Understanding Your Residential Status Properly

Whether you’re classified as Resident, Resident but Not Ordinarily Resident (RNOR), or Non-Resident completely changes your foreign income in ITR obligations. People who’ve recently relocated back to India, or those who’ve spent extended periods abroad, frequently get this classification wrong—leading to either overreporting or dangerously underreporting their global income.

Overlooking Employee Stock Options From Foreign Companies

If you work for a multinational company and hold RSUs or ESOPs from the parent company abroad, these need careful handling. Both the vesting event and any subsequent sale can trigger tax and disclosure obligations. This is one area where even experienced professionals sometimes miss a step, so double-checking here really pays off.

Skipping Inherited Foreign Assets

Inherited a house, land, or bank account from a relative who lived abroad? Even though inheritance itself typically isn’t taxed in India, the asset still needs to show up under your foreign asset disclosures once it’s in your name. This one gets missed constantly because inheritance doesn’t feel like “your” income in the traditional sense.

Poor Record-Keeping

Even a perfectly accurate disclosure can become a headache if you can’t back it up with documents. Bank statements, foreign tax certificates, purchase agreements—keep them all organized and accessible. If a query ever lands in your inbox, you’ll want to respond quickly, not scramble for months to dig up paperwork.

What Happens When Foreign Income in ITR Goes Undisclosed?

The Black Money Act allows for a flat penalty of ₹10 lakh for each instance of non-disclosure of a foreign asset, regardless of its actual monetary value.
Undisclosed foreign income can attract taxation at a flat 30% rate, without any deductions, exemptions, or set-offs allowed.
In more serious cases, this law even allows for prosecution with imprisonment ranging from 3 to 10 years.
Under regular tax provisions, misreporting income can also trigger penalties anywhere from 50% to 200% of the tax that was evaded.

FAQs

Q1. Do I really need to disclose foreign assets that earned zero income during the year?

Yes, you do. Disclosure under Schedule FA is based on ownership, not earnings. Even a dormant account with zero activity still needs to be reported.

Q2. What if I already paid tax on my foreign income in the country where I earned it?

You can claim relief through the Foreign Tax Credit mechanism, provided you file Form 67 before your ITR deadline. This prevents you from being taxed twice on the same income.

Q3. Is there a minimum threshold below which I don’t need to report a foreign asset?

While there have been some recent relaxations for very minor amounts under certain conditions, it’s generally safer to disclose everything rather than assume an exemption applies to your specific case.

Q4. Which ITR form should someone with foreign income use?

Typically, ITR-2 works for individuals without business income, while ITR-3 is needed if you have income from a business or profession alongside foreign holdings.

Q5. Can NRIs skip foreign income in ITR disclosure altogether?

For the most part, yes—NRIs are only required to disclose and pay tax on income that’s earned or received in India. Foreign income generally stays outside the scope of Indian taxation for non-residents, though it’s always smart to double-check based on individual circumstances.

Q6. What should I do if I realize I missed reporting foreign income in a previous year’s ITR?

You may be able to file a revised return if you’re still within the allowed window, or explore filing an updated return (ITR-U) if the deadline has already passed. Either way, addressing it proactively is far better than waiting for a notice to show up.

ITR Filing 2026 Deadline Extended

News

Shitanshu Kapadia

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June 30, 2026

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Filing your Income Tax Return (ITR) on time is one of the most important financial responsibilities for every taxpayer in India. Whether you are a salaried employee, a freelancer, a small business owner, or a company, submitting your tax return before the due date helps you avoid penalties, claim refunds faster, and maintain a clean tax record.

For the Assessment Year (AY) 2026–27, the Income Tax Department has introduced a revised filing calendar with different due dates for different categories of taxpayers. The updated schedule aims to make the filing process smoother by spreading out deadlines and reducing the rush toward a single due date.

If you’ve filed an ITR before, you’ll notice that some dates have changed. If you’re filing for the first time, understanding the new calendar will help you avoid confusion and last-minute mistakes.

The New ITR Filing Calendar for 2026

Here’s the updated schedule that’s going to help millions plan better:

ITR-1 and ITR-2: Due by 31 July 2026 These are for most salaried individuals, pensioners, and people with income from salary, one or two house properties, capital gains from shares or mutual funds, interest from savings or fixed deposits, and similar straightforward sources. If your life is mostly about a regular job and some investments, this is probably you.
ITR-3 and ITR-4 (for non-audit cases): Due by 31 August 2026 This extra month is a big win for freelancers, consultants, doctors, lawyers, small shop owners, partners in firms, and anyone using presumptive taxation schemes. You get more time to get your paperwork in order, double-check deductions, and file a cleaner return without rushing.
Cases requiring Tax Audit: Due by 31 October 2026 The audit report itself needs to be filed by 30 September. This applies to bigger businesses where turnover crosses certain limits.
Transfer Pricing Cases: Due by 30 November 2026 These are for companies dealing with international transactions or related parties.
Belated Return: Up to 31 December 2026 You can still file late, but it’s better to avoid it if possible.
Revised Return: Now extended to 31 March 2027 This is another welcome change. Earlier, you had to fix mistakes by December, but now you have almost the full assessment year to correct things like missed deductions or mismatches

Who Should File Which Form?

Let me make this even clearer with everyday examples:

Salaried Class (ITR-1 or ITR-2): Think of Ramesh, a marketing manager in a company. He gets Form 16 from his employer, has some savings interest, and maybe sold some stocks. Simple life, simple form, July 31 deadline.
Business and Professionals (ITR-3 or ITR-4): Priya runs a small graphic design freelance business. She has multiple clients, expenses on software and home office, and needs to track everything. Now she gets till August 31 to make sure her numbers are accurate.

Many people worry about choosing the wrong form. The good news is the income tax website usually guides you, but it’s always smart to check your income sources carefully.

What Happens If You Miss the Deadline?

Missing the date isn’t just about paying a small fine. Yes, there’s a late filing fee under Section 234F – Rs 5,000 normally, or Rs 1,000 if your total income is below Rs 5 lakh. On top of that, interest kicks in on any tax you still owe.

But the real pain points are bigger:

You might lose the option to choose the old tax regime and get pushed into the new one automatically.
Certain losses (like business losses or capital losses) can’t be carried forward to future years.
It can create unnecessary notices or scrutiny later.

That’s why planning ahead is so important. Start gathering your documents early – Form 16, bank statements, investment proofs, rent receipts if claiming HRA, medical bills for deductions, and so on.

Conclusion

Filing ITR on time not only helps in avoiding any kind of penalties and interest but also plays an important role in loan approvals, visa applications, and many other things. Moreover, there is also peace of mind once the process is completed.

When it comes to a newly launched company, or an individual who is starting his career as a professional, understanding the basic concepts of Income Tax Returns filing may help him a lot.

Though taxes may appear dull, yet one should keep in mind that filing the tax returns is an essential part of managing finances effectively.

For guidance, one may refer to the income tax e-filing website, which contains various guidance and help sections related to tax return filing, or consult a chartered accountant.

Thus, note the deadline dates: July 31st for salaried people and August 31st for businesses and professionals.