What is the tax rate applicable for sec 111 A. ( Short term capital gain)? Its urgent...........................................
Deeps
(Article Assisstant)
(2485 Points)
Replied 24 October 2009
SHORT TERM CAPITAL GAINS TAX IN RESPECT OF EQUITY SHARES/UNITS OF AN EQUITY ORIENTED FUND REDUCED TO 15% [SECTION 111A]
(i) This section provides for a concessional rate of tax (i.e. 15%) on the short-term capital
gains on transfer of -
(1) an equity share in a company or
(2) a unit of an equity oriented fund.
(ii) The conditions for availing the benefit of this concessional rate are –
(1) the transaction of sale of such equity share or unit should be entered into on or after
1.10.2004, being the date on which Chapter VII of the Finance (No. 2) Act, 2004 came into
force and
(2) such transaction should be chargeable to securities transaction tax under the said
Chapter.
(iii) The proviso to this section provides that in the case of resident individuals or HUF, if the
basic exemption is not fully exhausted by any other income, then the short-term capital gain
will be reduced by the unexhausted basic exemption limit and only the balance would be taxed
at 15%. However, the benefit of availing the basic exemption limit is not available in the case
of non-residents.
(iv) Deductions under Chapter VI-A cannot be availed in respect of such short-term capital
gains on equity shares of a company or units of an equity oriented mutual fund included in the
total income of the assessee.
The expression “equity oriented fund” has the same meaning assigned to it in the explanation
to section 10(38) of the Act i.e. “Equity oriented fund” means a fund –
(1) where the investible funds are invested by way of equity shares in domestic companies
to the extent of more than 50% of the total proceeds of such fund; and
(2) which has been set up under a scheme of a Mutual Fund specified under clause (23D).
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