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I-T Dept Issues FAQs on LTCG Tax

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I-T Dept Issues FAQs on LTCG Tax
Levy only on shares sold after April 1, 2018
The income tax department has issued a set of frequently asked questions (FAQs) to clear doubts about the long-term capital gains tax levied on shares in the budget, clearly providing that the tax will be levied on shares sold after April 1, 2018.
"The new tax regime will be applicable to transfer made on or after 1st April, 2018, the transfer made between 1st February, 2018 and 31st March, 2018 will be eligible for exemption under clause (38) of section 10 of the Act," it said. There had been confusion that the regime will apply to shares sold on or after February 1, the day of the budget.
This also means there could be pressure on stock prices as investors sell shares to take advantage of the earlier regime till March 31. By the same reasoning, the long-term capital loss arising from transfer made on or after April 1, 2018 will be allowed to be set-off and carried forward in accordance with existing provisions of the Act.
But as the exemption from long-term capital gains under clause (38) of section 10 will be available for transfer made between February 1, 2018 and March 31, 2018, the long-term capital loss arising during this period will not be allowed to be set off or carried forward.
The capital gains tax will be levied on equity shares in a company listed on a recognised stock exchange, unit of an equity oriented fund and unit of a business trust. There will be no deduction of tax at source from the payment of long-term capital gains to a resident tax payer.
However, tax at the rate of 10% will be deducted from payment of long-term capital gains to a nonresident tax payer except Foreign Institutional Investor (FIIs). In the case of FIIs as well, there will be no tax on gains accrued up to 31st January, 2018. In case of bonus shares acquired before February 1, the gains up to January 31 will be exempt.
The Economics Times, NewDelhi, 05th Feburary 2018

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