The Finance Minister, Mr. Arun Jaitely, has proposed to relax certain conditions for availing 10 percent concession on long-term capitals gain tax. The Ministry has invited stakeholders feedback on draft notification that lists out scenarios wherein individuals need not pay Securities Transaction Tax (STT) at the time of purchase for availing concessional tax rate.
In the 2018-19 budget, after a long gap of 14 years, the government reintroduced 10 percent on long-term capital gains exceeding Rs 1 lakh from the sale of shares.
The Central Board of Direct Taxes (CBDT) has clearly specified the nature of acquisitions with respect to which requirement of payment of STT will not be applicable for availing LTCG concessional rate.
Garima Pande, Partner and Business Tax Services Leader at EY India,
The Government had exempted certain modes of acquisition of equity shares from the condition of payment of STT at the time of acquisition in order to be eligible for 10 percent LTCG regime. There can be various genuine cases where STT could not have been paid.
Abhisheikh Goenka, PwC Leader at Corporate and International Tax informed that draft notification has been issued particularly in the context of transactions where STT are not paid at the time of sale or acquisition of securities.
Goenka said, “It includes the same scenarios that were notified earlier in 2017 in context of shares that were acquired after 2004. The draft is very much in context and covers most genuine transactions. However, there are many concerns related to language concerns that need to be addressed.”
Until March 2018, The long-term capital gains ( LTCG) were nil for shares sold after a year of purchase. LTCG on sale of unlisted shares is taxed at 20 percent and for short-term capital gains, it is taxed at 30 percent.