Quick Summary
Amendment of Section 55 of the Act Prior to Finance Act, 2018, section 10(38) of the Income Tax Act, 1961 (the Act) provided for exemption in respect of gains arising from the transfer of a long-term capital asset, being an equity share in a company or a unit of an equity oriented fund or a unit of a business trust where the transaction is subject to Securities Transaction Tax (STT). Finance Act, 2018 withdrew the exemption on long-term capital gains from the transfer of equity shares if STT is
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1 Year PLAN
1999
(Excl. of GST ₹359)
2 Years PLAN
3499
(Excl. of GST ₹629)
BEST VALUE
3 Years PLAN
4999
(Excl. of GST ₹899)
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FAQ :
The amendment aims to clarify the calculation of the cost of acquisition for equity shares, particularly those involved in Offer for Sale (OFS) within Initial Public Offerings (IPOs), where shares might be unlisted at the time of transfer.
A loophole was identified where taxpayers might not pay capital gains tax on shares acquired via OFS because the Fair Market Value (FMV) was difficult to determine for unlisted shares at the time of transfer, even if Securities Transaction Tax (STT) was paid on the sale.
The amendment proposes that the FMV will be calculated using a specific formula, relating the cost of acquisition to the Cost Inflation Index for the financial year 2017-18 and the year the asset was first held or April 1, 2001, whichever is later.
The amendment is proposed to be effective from April 1, 2018, meaning it will apply retrospectively from the assessment year 2018-19 onwards.
Yes, the amendment is designed to address the computation of the cost of acquisition for assets covered under Section 112A, which includes shares acquired prior to February 1, 2018, and is being applied retrospectively from April 1, 2018.
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