Taxability of Long-term Capital Gains on sale of listed equity shares etc.
Long term capital gains(LTCG) arising from transfer of long term capital assets, being equity shares of a company or an unit of equity oriented fund or an unit of business trusts, is exempt by virtue of section 10(38), provided sale and acquisition transactions carried out on a recognized stock exchange and are liable to securities transaction tax (STT).
Proposed Amendment: In order to minimize economic distortions and curb erosion of tax base, section 10(38) proposed to be withdrawn. For taxing LTCG in excess of Rs. 1 lakh @10%, a new section 112A proposed to be inserted with effect from A.Y. 2019-20.
All LTCG up to 31st January, 2018 will be grandfathered by way of providing that the cost of acquisitions in respect of the long term capital asset acquired by the assessee before the 1st day of February, 2018 , shall be deemed to be the higher of –
a) the actual cost of acquisition of such asset; and
b) the lower of –
(I) the fair market value of such asset on 31.1.2018 ; and
(II) the full value of consideration received or accruing as a result of the transfer of the capital asset.
Such capital gains would neither be eligible for benefit of Chapter VI-A deductions nor rebate u/s 87A.