The Finance Act, 2018, withdrew an exemption under section 10(38) of the Income Tax Act, 1961 (ITA), on long-term capital gains (LTCG) arising from the transfer of listed equity shares or units of an equity oriented fund. The act also introduced section 112A to impose LTCG tax on capital gains exceeding ₹100,000 (US$1,500) at the rate of 10%, effective from the 2018-19 financial year.
Section 112A provides that the beneficial rate of 10% LTCG tax will be available only if the requisite securities transaction tax (STT) was paid at both the time of the acquisition and at the time of transfer of the asset. However, section 112A left room for the government to notify certain modes of acquisition where payment of STT would not apply to obtain the 10% beneficial LTCG tax rate.
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The business law digest is compiled by Nishith Desai Associates (NDA). NDA is a research-based international law firm with offices in Mumbai, New Delhi, Bengaluru, Singapore, Silicon Valley, Munich and New York. It specializes in strategic legal, regulatory and tax advice coupled with industry expertise in an integrated manner.
