Skip to main content

IPOs, FPOs, ESoPs exempted from STT for availing of concessional 10% LTCG

By
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% LTCG rate
Initial public offerings, bonus, rights issues and ESoPs will be eligible for concessional rate of 10 per cent long-term capital gains (LTCG) tax even if the Securities Transaction Tax has not been paid earlier. In the 2018-19 budget, the government had after a gap of 14 years reintroduced concessional 10 per cent on LTCG tax exceeding Rs 100,000 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.
Nangia Advisors LLP Managing Partner Rakesh Nangia said clarification was needed with respect to the taxability of the newly introduced long-term capital gains on equity shares, since unintended hardships may have been experienced in certain fact-specific cases. "Alongside the list of acquisition of equity shares which are not eligible for concessional 10 per cent tax on LTCG, the notification also provides carve-outs to insulate genuine acquisitions of non-STT based acquisitions," Nangia said. The notification also provides situation where concessional rate of LTCG shall be denied in respect of shares acquired during the intervening period i.e. the period of de-listing of company and the day prior to its re-listing.
"A peculiar case of transfer of shares during the intervening period when the shares are de-listed may still face hardship owing to the denial of concessional rate. Another area of concern is when acquisition is outside the stock exchange but on account of events such as liquidation, contribution of shares to the firm, etc," Nangia said.
The Business Standard, 08th October 2018

Comments

Post a Comment

Popular posts from this blog

RBI deputy governor cautions fintech platform lenders on privacy concerns during loan recovery

By
  India's digital lending infrastructure has made the loan sanctioning system online. Yet, loan recovery still needs a “feet on the street” approach, Swaminathan J, deputy governor of the Reserve Bank of India, said at a media event on Tuesday, September 2, according to news agency ANI.According to the ANI report, the deputy governor flagged that fintech operators in the digital lending segment are giving out loans to customers with poor credit profiles and later using aggressive recovery tactics.“While loan sanctioning and disbursement have become increasingly digital, effective collection and recovery still require a 'feet on the street' and empathetic approach. Many fintech platforms operate on a business model that involves extending small-value loans to customers often with poor credit profiles,” Swaminathan J said.   Fintech platforms' business models The central bank deputy governor highlighted that many fintech platforms' business models involve providing sm
Post a Comment
Read more

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the rep
Post a Comment
Read more

India can't rely on wealthy to drive growth: Ex-RBI Dy Guv Viral Acharya

By
  India can’t rely on wealthy individuals to drive growth and expect the overall economy to improve, Viral Acharya, former deputy governor of the Reserve Bank of India (RBI) said on Monday.Acharya, who is the C V Starr Professor of Economics in the Department of Finance at New York University’s Stern School of Business (NYU-Stern), said after the Covid-19 pandemic, rural consumption and investments have weakened.We can’t be pumping our growth through the rich and expect that the economy as a whole will do better,” he said while speaking at an event organised by Elara Capital here.f there has to be a trickle-down, it should have actually happened by now,” Acharya said, adding that when the rich keep getting wealthier and wealthier, they have a savings problem.   “The bank account keeps getting bigger, hence they look for financial assets to invest in. India is closed, so our money can't go outside India that easily. So, it has to chase the limited financial assets in the country and
Post a Comment
Read more