By TIOL News Service

NEW DELHI, APRIL 24, 2018: The Finance Act, 2018 has withdrawn the exemption under clause (38) of Section 10 of the Income-tax Act, 1961 and has introduced a new section 112A in the Act, to provide that long term capital gains (LTCG) arising from transfer of a long-term capital asset being an equity share in a company or a unit of an equity oriented fund or a unit of a business trust shall be taxed at 10 per cent of such capital gains exceeding Rs one lakh. The said section provides that the provisions of the section shall apply to the capital gains arising from a transfer of long-term capital asset being an equity share in a company, only if securities transaction tax (STT) has been paid on acquisition and transfer of such capital asset.

However, to provide the applicability of the tax regime u/s 112A of the Act to genuine cases where the STT could not have been paid, it has also been provided u/s 112A(4) of the Act that the Central Govt may specify, by notification, the nature of acquisitions in respect of which the requirement of payment of STT shall not apply in the case of acquisition of equity share in a company.

In order to have wider consultation in this matter, the draft of notification has been made public and feedback may be sent latest by April 30, 2018 at dirtpl2@nic.in.