Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: TDS :: articles on VAT and GST in India :: due date for vat payment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: form 3cd :: Central Excise rule to resale the machines to a new company :: empanelment :: VAT Audit :: ACCOUNTING STANDARDS :: TAX RATES - GOODS TAXABLE @ 4% :: cpt :: list of goods taxed at 4% :: ACCOUNTING STANDARD :: VAT RATES :: ARTICLES ON INPUT TAX CREDIT IN VAT
 
 
General »
 Simplified one page Income Tax Return Form: Changes to keep in mind before filing tax return for AY2017-18
  No proposal to replace Income Tax with Banking Cash Transaction Tax
 GST coming July 1 despite calls for delay: Revenue Secretary Hasmukh Adhia
 Centre introduces provision of taxation on NPS in Income Tax Act
 Income Tax Department Clarifies On Cash Withdrawal From Banks, Post Offices
 The Goods And Services Tax (Compensation To States) Bill, 2017
  Goods and Service Tax (GST) and Real Estate Sector
 New Income Tax Rules On Home Loan Come Into Effect
 Here's how late filers can save on stress and taxes
 Clarifications on the Taxation and Investment Regime for Pradhan Mantri Garib ?Kalyan Yojana, 2016
 Companies should invest in upgradation of tax technology

Watch out for the changes in capital gains tax regime
July, 01st 2010

One of the important mid- to long-term investment avenues where individuals invest their savings is equity and mutual funds.

Also, Employee Stock Option Plans (ESOPs) have been used as an important tool by the companies, especially the start-up businesses and unlisted companies planning to go for IPO in near future, to attract, retain and motivate employees.

One of the key attractions in respect of the equity shares/specified securities listed in a stock exchange is the nil/lower tax rate in comparison with other investment assets.

Long-term capital gains

If shares are held by the tax payer for more than 12 months, then gains arising from their sale/transfer are treated as long term capital gains. If the period of holding is lower, then such gain is treated as short term capital gains.

Long term capital gains arising from the sale of shares listed on a stock exchange in India on which Security Transaction Tax (STT) is paid are not subject to tax.

While short term capital gains arising in case of listed shares on which STT is paid are subject to tax at a concessional rate of 15% plus education cess.

In case of unlisted shares, the long term capital gains are taxed at a concessional rate of 20% plus education cess. While the short-term capital gains are taxed at the applicable rate i.e. as per the slab rate applicable to the individuals.

Capital gains is to be treated as income from ordinary sources

As per the revised discussion paper on Direct Taxes Code, capital gains is to be treated as income from ordinary sources and taxed at the applicable rates, as below:

(i) Listed shares: In case of equity shares listed on a recognised stock exchange, which are held for more than one year from the end of the financial year in which these are acquired, the capital gains shall be computed after allowing a deduction at a specified percentage of such gains without any indexation. Thus, it would reduce the effective tax rate in case of long term capital gains.

(ii) Unlisted shares: In case of long-term capital gains arising in case of unlisted shares, the base rate for determining the cost of acquisition is proposed to be shifted from 1 April 1981 to 1 April 2000. The capital gains will be computed after allowing indexation on this raised base. The capital gains on such assets will be included in the total income of the tax payer and will be taxed at the applicable rate.

Short-term capital gains

In case of short-term capital gains arising from any investment asset held for less than one year from the end of the financial year in which these are acquired, the capital gains shall be computed without any specified reduction or indexation benefit. Such capital gains will be included in total income of the tax payer and will be charged to tax at the rate applicable to the tax payer.

STT to continue

Further, the STT is proposed to be continued albeit in a calibrated manner to be specified, being a tax on the transaction.

Important to note

It is important to note that it is proposed to tax capital gains whether long-term or short-term, listed or unlisted, as per the method/rates to be prescribed.

Therefore, individual investors who have invested in the equities or equity-oriented funds need to analyse the impact of the proposed changes on their portfolio as the capital gains arising from sale of shares would now be subject to tax in all cases including those of listed shares.

Similarly, the stock option schemes, especially those of unlisted companies, may require a re-evaluation as the long-term capital gains after IPO would now be subject to tax in the hands of the employees.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Content Management System development CMS development Content Management Solutions CMS Solutions Content Management Services CMS Services CMS Software

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions