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

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...
Post a Comment
Read more

SFBs should be vigilant, proactive to mitigate risks: RBI deputy guv

By
  The Reserve Bank of India’s Deputy Governor Swaminathan J on Friday instructed the directors of small finance banks (SFBs) to be vigilant and proactive in identifying emerging risks in the sector.Speaking at a conference for directors on the boards of SFBs, Swaminathan highlighted the role of governance in guiding SFBs towards sustainable growth with stability. He also emphasised the importance of sustainable business models.Additionally, he highlighted the need for strengthening cybersecurity to protect the entities against digital threats and urged for a stronger focus on financial inclusion, customer service, and grievance redressal to ensure a broader reach of banking services.Executive Directors S C Murmu, Rohit Jain, and R L K Rao, along with other senior officials representing the Supervision, Regulation, and Enforcement Departments of the RBI, also participated in the conference.   -  Business Standard  30 th  September, 2024
Post a Comment
Read more

Brigade Hotel Ventures files draft papers with Sebi for Rs 900 crore IPO

By
  Brigade Hotel Ventures Ltd, owner and developer of hotels in South India, has filed draft papers with capital markets regulator Sebi to raise Rs 900 crore through an initial public offering (IPO).The proposed IPO is entirely a fresh issue of equity shares with no Offer-for-Sale (OFS) component, according to the draft red herring prospectus (DRHP).Proceeds from the issue to the tune of Rs 481 crore will go towards payment of debt, Rs 412 crore will be allocated to the company and Rs 69 crore to its material subsidiary, SRP Prosperita Hotel Ventures Ltd.Additionally, Rs 107.52 crore will be used to purchase an undivided share of land from the Promoter, BEL, and the remaining funds will support acquisitions, other strategic initiatives, and general corporate purposes.The company may raise up to Rs 180 crore through a Pre-IPO Placement.   If the placement is undertaken, the issue size will be reduced.Brigade Hotel Ventures Ltd is a wholly-owned subsidiary of Brigade Enterprises ...
Post a Comment
Read more