The government on Tuesday opened for public discussion its proposed clause in the Income Tax Act that would give the government the power to specify the applicability of the long-term capital gains tax and the security transaction tax.
The Finance Act 2018 had introduced section 112A in the Income Tax Act, to provide that long-term capital gains arising from the transfer of a long-term capital asset, if it is an equity share in a company, be taxed at 10% of the value of the gains exceeding Rs 1 lakh.
“The said section, inter alia, provides that the provisions of the section shall apply to the capital gains arising from a transfer of long-term capital asset being an equity share in a company, only if securities transaction tax (STT) has been paid on the acquisition and transfer of such capital asset,” the government said in a release.
“However, to provide the applicability of the tax regime under section 112A of the Act to genuine cases where the STT could not have been paid, it has also been provided in sub-section (4) of section 112A of the Act that the Central Government may specify, by notification, the nature of acquisitions in respect of which the requirement of payment of STT shall not apply in the case of acquisition of equity share in a company,” the release added.
The government has put up the draft notification proposed to be issued under Section 112A (4) for suggestions from the public.
