Long-Term Capital Gains on Transfer Of Equity Shares or Units of an Equity Oriented Mutual Fund or a unit of a Business Trust Covered By Securities Transaction Tax [Section 10(38)]

Long-term capital gains arising on transfer of securities are not chargeable to tax in the hands of any person, if following conditions are satisfied :

 

1.         The asset transferred should be equity shares of a company or units of an equity oriented mutual fund or a unit of a business trust.

 

2.         The transaction should be liable to securities transaction tax, at the time of transfer.

 

3.         Such asset should be a long-term capital asset.

 

4.         Transfer should have taken place on or after October 1, 2004.

Equity oriented mutual fund means a mutual fund specified under section 10(23D) and 65% of its investible funds, out of total proceeds are invested in equity shares of a domestic company.

 

Note:

(1)       With effect from 1-4-2016, exemption from capital gains under Section 10(38) shall be available even in respect of long-term capital gains arising from transfer of units of a business trust which were acquired in lieu of shares of special purpose vehicle as referred to in section 47(xvii) and on which securities transaction tax has been paid.

 

(2)       Exemption from long term capital gains under section 10(38) shall be available w.e.f April 1, 2017 even where STT is not paid, provided that -

 

-           transaction is undertaken on a recognised stock exchange located in any International Financial Service Centre, and

 

-           consideration is paid or payable in foreign currency

 

 

 

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