Clause - 003 - Amendment of section 2.

THE FINANCE BILL, 2017

The existing provisions contained in clause (42A) of the said section defines the expression "short-term capital asset"

It is proposed to insert a new sub-clause (hf) in Clause (i) of Explanation 1 of the said clause so as to provide that in the case of a capital asset being equity shares in a company, which becomes the property of the assessee in consideration of a transfer referred to in clause (xb) of section 47, there shall be included the period for which the preference shares were held by the assessee.

 

Short-term capital asset definition extended to include preference share holding period when converted into equity shares. Amendment expands the definition of short-term capital asset so that equity shares received as consideration in a specified transfer include the period during which the assessee held the preference shares, thereby aggregating the preference shares' holding period with that of the equity shares for classification purposes.