Here is an interesting case that may be worthy of your attention and advice.
I have deliberately shown certain words in capital letters including the word EXCEPT specifically to draw your attention towards them.
Tax Law
Tax Payers Information Series - 3 "How to Compute Your Capital Gains" published by INCOME TAX DEPARTMENT, Directorate of Income Tax (PR, PP & OL), 6th Floor, Mayur Bhawan, Connaught Circus, New Delhi-110001 states on page 3 "Profits or gains arising from the transfer of a capital asset made in a previous year is taxable as capital gains under the head “Capital Gains”. The important ingredients for capital gains are, therefore, EXISTENCE of a capital asset, transfer of such capital asset and profits or gains that arise from such transfer. Capital asset means property of any kind EXCEPT the following: item e) v) on page 5 last Para "Capital gains arising from the transfer of a long term capital asset, being an EQUITY share in a company or UNIT in an equity oriented fund where such a transaction is CHARGEABLE TO SECURITIES TRANSACTION TAX and takes place ON OR AFTER 1st October, 2004".
Situation
When I sell equity and/or non-convertible debentures through HDFC Securities Trading, the contract shows the amount of securities transaction tax deducted from sale proceeds. When I redeem units in mutual funds I receive IH16.Investment Performance Statement showing STT deducted from redemption proceeds.
Question
Such transactions, therefore, may NOT attract income tax? Please offer your opinion.
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