Section 196 — Tax on short-term capital gains in certain cases
Old Act equivalent: Section 111A of IT Act 1961 Sub-part: B—Special provisions relating to tax on capital gains
Statutory Text
- (1) Where the total income of an assessee includes any income chargeable under the head “Capital gains”, arising from the transfer of a short-term capital asset—
(a) being an equity share in a company or a unit of an equity oriented fund or a unit of a business trust; and
(b) the transaction of sale of such equity share or unit is chargeable to secu rities transaction tax under Chapter VII of the Finance (No. 2) Act, 2004 (23 of 2004), then, the tax payable by the assessee on the total income, subject to the provisions of sub-section (2), shall be the aggregate of— (2) In the case of an individual or a Hindu undivided family, being a resident, where the total income, as reduced by short-term capital gains computed under sub-section (1), is below the maximum amount which is not chargeable to income-tax, then,—
(a) such short-term capital gains shall be reduced by the amount by which the total income as so reduced falls short of the maximum amount which is not chargeable to income-tax; and
(b) the tax on the balance of such short-term capital gains shall be computed at the rate as applicable in sub-section (1)(i). (3) The provisions of sub-section (1)(b) shall not apply to a transaction undertaken on a recognised stock exchange located in any International Financial Services Centre and where the consideration for such transaction is paid or payable in for eign currency. (4) Where the gross total income of an assessee includes any short-term capital gains referred to in sub-section (1), the deduction under Chapter VIII shall be allowed from the gross total income as reduced by such capital gains. (5) For the purposes of this section, the expression “equity oriented fund” shall have the meaning assigned to it in section 198. Tax on long-term capital gains.
Provisos
None.
Explanations
None.
Tables
None.
Key Structure
- Applies to: Any assessee with STCG from transfer of equity shares/units of equity oriented fund/business trust where STT is charged.
- Conditions: Transaction chargeable to securities transaction tax.
- Time limits: None.
- Monetary limits: 20% on STCG from listed equity/units with STT.
- Exceptions: Not available for units of equity oriented fund if fund does not meet prescribed conditions.
Cross-References
Amendment Notes
None noted from the extracted pages.