The provisions of Section 115AD, inter alia, provide that where the total income of a Foreign Institutional Investor (FII) includes income by way of Long-Term Capital Gains arising from the transfer of certain Securities , such Capital Gains shall be chargeable to Tax at the rate of 10%. However, Long-Term Capital Gain ( where Securities Transaction Tax is applicable) is Exempt by virtue of Section 10(38).
• Amendment - After the withdrawal of exemption under section 10(38), long-term capital gain on transfer of equity shares/equity oriented units of mutual fund will become taxable in the hands of FIIs also. As in the case of domestic investors, the FIls will also be liable to tax on such long-term capital gains only in respect of amount of such gains exceeding Rs. 1 lakh. The provisions of section 115AD have been amended accordingly.