The Finance Act. 1999 had, with effect from the A.Y. 2000-2001, inserted a new Section 115ACA relating to tax on income from Global Depository Receipts (GDR) purchased in foreign currency or capital gains arising from transfer. Thus, it is provided that on the income by way of dividends or long-term capital gains in respect of GDRs of an Indian company purchased by a resident employee of such company in accordance with the notified employee’s stock option scheme, the income tax payable would be at the rate of 10%. This concessional rate of 10% would only apply to the income from investment in GDRs of a resident employee of a domestic company engaged in information technology software and information technology services. Of course, no other deduction in respect of such dividend income and long-term capital gains would be allowed in the case of such resident employee. The first and the second provisos to Section 48(1) would also not apply while computing the long-term capital gains in such a case. The scope of this concession has been widened by the Finance Act, 2001. |
