New Law Regarding Taxation of Longterm Capital Gains From Equity Shares, Units, Etc. New Law Regarding Taxation of Longterm Capital Gains From Equity Shares, Units, Etc.

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The Tax Publishers New Law Regarding Taxation of Long-term Capital Gains From Equity Shares, Units, Etc. CA. Manoj Gupta Hitherto long-term capital gains arising from transfer of equity share in a company, unit of an equity-oriented mutual fund or unit of business trust was exempt from tax. The Finance Act, 2018 has shifted away from this practice and taxed gains arising from these instruments if they are in excess of Rs. 1,00,000. The learned author explains the new provisions. 1. Exemption provisions as to long-term capital gains section 10(38) provides for exemption to long-term capital gains arising from sale of equity share in a company or unit of an equity-oriented fund or a unit of a business trust-- (i) Conditions precedent for exemption Following conditions shall have to be fulfilled in order to avail the exemption : (i) Gain should arise from the transfer of a long-term capital asset. (ii) Such long-term capital asset should be equity share in a company or unit of an equity-oriented fund or a unit of a business trust. (iii) The gain should arise from the transaction of sale of equity share in a company or unit of an equity-oriented fund or a unit of a business trust. (iv) Such transaction of sale of such equity share or unit should be entered into on or after the date on which Chapter VII of the Finance (No. 2) Act, 2004 comes into force. This chapter has come into force from 1-10-2004. [Chapter VII deals with Securities Transaction Tax]. (v) Such transaction of sale should be chargeable to securities transaction tax under that Chapter. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

New Law Regarding Taxation of Long-term Capital Gains From Equity Shares, Units, Etc.

CA. Manoj Gupta

Hitherto long-term capital gains arising from transfer of equity share in a company, unit of an equity-oriented mutual fund or unit of business trust was exempt from tax. The Finance Act, 2018 has shifted away from this practice and taxed gains arising from these instruments if they are in excess of Rs. 1,00,000. The learned author explains the new provisions.

1. Exemption provisions as to long-term capital gains

section 10(38) provides for exemption to long-term capital gains arising from sale of equity share in a company or unit of an equity-oriented fund or a unit of a business trust--

(i) Conditions precedent for exemption

Following conditions shall have to be fulfilled in order to avail the exemption :

(i) Gain should arise from the transfer of a long-term capital asset.

(ii) Such long-term capital asset should be equity share in a company or unit of an equity-oriented fund or a unit of a business trust.

(iii) The gain should arise from the transaction of sale of equity share in a company or unit of an equity-oriented fund or a unit of a business trust.

(iv) Such transaction of sale of such equity share or unit should be entered into on or after the date on which Chapter VII of the Finance (No. 2) Act, 2004 comes into force. This chapter has come into force from 1-10-2004. [Chapter VII deals with Securities Transaction Tax].

(v) Such transaction of sale should be chargeable to securities transaction tax under that Chapter.