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Taxation of Transfer of Security Receipts (SRs) issued by a Securitization Trust

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Sudhir

Accountant

14 Points Joined June 2016

Dear Sir/Madam

Please help in Taxation of Transfer of Security Receipts (SRs) issued by a Securitization Trust by Qualified Institutional Buyers to other Qualified Institutional Buyers .

If we are holding for more than 3 years , wheather Indexation benefit can be availed or not . ( Long Term Asset )

Replies (2)

Rama chary Rachakonda

Master in Accounts & high court Advocate

9434 Points Joined December 2011

Taxation of Transfer of SRs The transfer of SRs issued by a Securitization Trust to Qualified Institutional Buyers (QIBs) is taxable under the Income-tax Act, 1961. Long-Term Capital

Gains (LTCG) If the SRs are held for more than 3 years, the gains from the transfer are considered Long-Term Capital Gains (LTCG).

Indexation Benefit Yes, indexation benefit can be availed for LTCG on transfer of SRs:

1. _Section 48 of the Income-tax Act, 1961_: Allows for indexation of cost of acquisition and improvement for LTCG.

2. _Rule 11UA of the Income-tax Rules, 1962_: Provides the method for calculating indexed cost of acquisition.

Taxation of LTCG The LTCG on transfer of SRs will be taxed at a rate of 20% (plus applicable surcharge and cess), with indexation benefit:

1. _Section 112 of the Income-tax Act, 1961_: Specifies the tax rate for LTCG.

2. _Section 113 of the Income-tax Act, 1961_: Provides for the calculation of tax on LTCG. Additional Considerations

1. _Securitization Trust_: The Securitization Trust should provide a certificate to the QIBs, specifying the details of the SRs, including the face value, issue date, and redemption date.

2. _QIBs_: The QIBs should maintain proper documentation, including the certificate from the Securitization Trust, to support the LTCG calculation and indexation benefit.

Sudhir

Accountant

14 Points Joined June 2016

Thanks for the reply sir

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