How to Decode New Capital Gains Tax on Listed Equity Shares

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  • By Taxmann
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  • Last Updated on 18 July, 2024

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Understanding the newly introduced Capital Gains Tax on Listed Equity Shares & Mutual Funds:
 
As per the Finance Bill, 2018 it has been proposed to withdraw the exemption offered under Section 10(38) to all long-term capital gains arising from the sale of listed equity shares. As a result, a new capital gains tax has been introduced @ 10% on all long-term capital gains arising from listed equity shares or mutual funds on or after April 1, 2018. This tax has been proposed to be calculated as per the special provisions of section 112A.

Interim Relief to Existing Investors:

However, the Finance Bill, 2018 has proposed an interim relief to the existing investors wherein they can step up the actual cost of acquisition of the shares or mutual funds. Investors are given as option to assume the lower of sales value or quoted price of these assets on Stock exchange as on January 31, 2018 as the cost of acquisition if, the actual cost of acquisition is lower. As a result, this would reduce the impact of capital gains tax on those investors who had invested in these shares or mutual funds on or before January 31, 2018 but transferred them on or after April 1, 2018.
 
If there is no trading on such equity shares on January 31, 2018, the market value of such shares would be the highest price on any date immediately preceding January 31, 2018, on which trade has been carried out in that scrip. Thus, it is quite difficult for a taxpayer to identify the last traded price if there is no trading on such equity shares on January 31, 2018. 

Better Understanding with Books on Tax Treatment of such Capital Gains:

Taxmann, the leading publisher of tax and corporate laws, has launched two special editions of books on the new tax treatment of gains arising from transfer of listed equity shares. These books are authored by India’s renowned tax experts, Mr V.K. Singhania, CA Pradeep Shah and CA Rajesh Kadakia. The authors have written more than 100 books on various subjects under direct taxes. Click here to buy Taxmann books from online bookstore. These books analyse the latest provision introduced in the current Finance Bill, 2018 which proposes the capital gains tax on listed equity shares. One of these books also provides the listed price of equity shares and NAV of mutual funds as on January 31, 2018, which is an essential element to calculate the capital gains from listed shares sold on or after April 01, 2018. These books also incorporates the market share quotations of more than 6500 scrips and mutual funds as on January 31, 2018 or any previous date on which trading is done at stock exchange. These books provide a threadbare analysis of the new tax proposal with more than 25 illustrations, several practical case studies and covers more than 50 topics, including applicability to Non-Residents, availability of benefit of section 54 F, bonus shares, amalgamations, etc. 

Disclaimer: This information is updated till 21st February, 2018.

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

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