LTCG on equities: Your tax bill could be lower with this new tweak

By: |
Published: April 25, 2018 10:42:37 AM

LTCG on equities: In a major relief to investors, the CBDT has proposed relaxing of certain conditions for availing the concessional 10 per cent long term capital gains tax on equities, even in certain cases where STT has not been paid.

LTCG tax, Finance Bill, capital gains, Cost Inflation Index, Rajya Sabha, news on LTCG taxThe CBDT has outlined many genuine cases, where STT could not be paid while acquiring shares.

LTCG on equities: In a major relief to investors, the CBDT has proposed relaxing of certain conditions for availing the concessional 10 per cent long term capital gains tax on equities, even in certain cases where STT has not been paid. Following its introduction in Budget-2018, in case of listed equity shares, investors will be charged tax on long term capital gains exceeding Rs 1 lakh at the rate of 10% without allowing the benefit of any indexation. Further, gains made up to January 31st were grandfathered. This rule was applicable in cases where the STT had been paid.

However, in certain cases where the STT had not been paid, The Income Tax Act levied a 20% tax. Now, the CBDT has outlined many genuine cases, where STT could not be paid while acquiring shares. For such transactions, from now on are proposed to qualify for a lower LTCG tax rate of 10%.

Detailing out the genuine cases, the draft notification said that payment of STT as a necessary condition will not apply to cases where acquisition of existing listed equity share in a company, whose equity shares are not frequently traded in a recognised stock exchange of India, is made through a preferential issue. The exemption has also been provided to companies whose shares are delisted and listed again later.

Taking stock of the development, Garima Pande, partner & business tax services leader at EY told The Financial Express, “The central 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% LTCG regime. There can be various genuine cases where STT could not have been paid.” The notification is now at a draft stage and will come into effect from April 2019. The board has asked stakeholders for comments by April 30.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.