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What are Unrealised gains?

Unrealised gains

Unrealised gains

Unrealised gains are notional gains that you are yet to capitalise. The term is widely used while dealing with stocks. As known to everyone, the value of stocks depends on the market and fluctuates on a daily basis. So, while you may be at a gain today, due to market conditions, you may be at a loss by investing in the same stock. The magnitude of your profit or loss also varies.

This term is used when you want to calculate the market value of your investment. You won’t sell them now, just you want to analysis your portfolio, it is also referred to as paper profit. The actual gain or loss can only be determined when the position is settled or closed. And, as expected your unrealised gains are not subject to any taxation.

Lets explain with an example.

Suppose, you have brought a share of Ashok Leyland at Rs.100 per share. The present value of the share is Rs.102 per share, so now you have an unrealised gain of Rs.2 per share. Similarly, if yesterday, its value was Rs.105 per share , then yesterday your unrealised gain was Rs.5 per share. Since, the gain is notional and you have not acquired it, it is termed as unrealised gain and you are not taxed based on this.

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Sreya Ray is working as a Manager at State Bank of India. She is a voracious reader and a passionate writer. Her life is complete with her daughter and the support of her husband and the inspiration of her parents. Sreya loves multi-tasking and is a dreamer. If she don't create anything on a day,She feels that she had wasted my day.