IPOs, FPOs, ESoPs exempt from STT for concessional LTCG tax
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In the 2018-19 budget, the government had after a gap of 14 years reintroduced concessional 10 per cent on LTCG tax exceeding Rs 1 lakh from sale of shares, subject to payment of Securities Transaction Tax (STT) at the time of acquiring the equities.
The finance ministry also decided to exempt certain transaction from payment of STT for availing the concessional 10 per cent LTCG rate.
The ministry has notified a list of carve outs which will be exempt from the requirement of paying STT. These include IPO, follow-on public offer (FPO), bonus or rights issue by a listed company, acquisition approved by Court/NCLT/SEBI/RBI, acquisition pursuant to exercise of ESOPs.
Also the off-market transactions undertaken by non-residents in line with FDI guidelines, qualified institutional buyers, venture capitalist without payment of STT too could avail the 10 per cent LTCG rate.
Prior to April 2018, the long term capital gains tax was nil for shares sold after a year of purchase.
In case the STT has not been paid and the transactions are not in the exempt list, the usual LTCG tax rate of 20 per cent would apply of sale of shares. Short term capital gains tax continues to be 30 per cent.
The CBDT followed a consultative and pro-active approach by seeking stakeholder's comments on the draft notification issued earlier in April 2018 and have duly considered most of the stakeholder comments while issuing the final notification. #casansaar (Source - PTI, Economic News)
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