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  • Category: Miscellaneous

    Change in Section 10(38) of Income Tax Act: Long-term capital gains tax

    Section 10(38) of the Income Tax Act has the provision of exemption of long-term capital gains tax from sale of equity shares or equity mutual funds if Security Transaction Tax (STT) is paid on the investment. The investors who directly invest in equity and investors in equity-based mutual funds are required to note that in Budget 201,7 the provision in response of Section 10 (38) has been modified. It has been proposed that exemption of Section 10 (38) can be availed for equity shares purchased after 1st October 2004, only if STT has been paid on purchase.

    This revised provision will come into force from 1st April 2017. All equity investors may kindly note this significant change in the Income Tax Act. So, listed shares acquired by off-market route (as for example, gifted by relatives, friends, etc. where STT is not paid) will attract long-term capital gains tax at the rate of 10% if sold on or after 1st April, 2017.
  • #591631
    This is the great information shared by the author and those who are habituated in trading stock would benefit from the new capital gains tax act effective April this year.
    K Mohan
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • #591633
    Mr. Mohan: On the contrary, some share-holders may have to pay more tax if STT was not paid at the time of acquiring the shares.
    Non-violence is the greatest Dharma; So too is all righteous violence.

  • #591769
    Very nice information provided by Kansabanik and is really useful for those who have sold shares through off market routes.
    I just want to add that most of the transactions today are online and in all cases STT is already paid so the new tax regulation will not be affecting these transactions.
    On the other hand very few transactions are in off market mode where this new regulation is to be carefully observed.
    Generally people miss this type of fine information and unnecessarily land in receiving queries from IT Deptt.

    Knowledge is power.

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