Clause - 006 - Amendment of section 10.

THE FINANCE BILL, 2017

Certain incomes not included in total income u/s 10

The existing provisions contained in the said section provide that in computing the total income of a previous year of any person, certain categories of income shall not be included in total income.

Clause 38 of the said section, inter alia, provides for an exemption from tax on the income arising from the transfer of a long-term capital asset, being an equity share in a company or a unit of an equity oriented fund or a unit of a business trust, where such transaction is chargeable to securities transaction tax under Chapter VII of the Finance (No.2) Act, 2004.

It is proposed to amend the said clause (38) so as to provide that any income arising from the transfer of a long term capital asset, being an equity share in a company shall not be exempted, if the transaction of acquisition, other than the acquisition notified by the Central Government in this behalf, of such equity share is entered into on or after the 1st day of October, 2004 and such transaction is not chargeable to securities transaction tax under Chapter VII of the Finance (No. 2) Act, 2004.

 

Capital gains exemption restriction applies where securities transaction tax not paid on equity share transfers, affecting post acquisition transactions. Amendment to clause 38 of section 10 denies exemption for income from transfer of a long-term capital asset being an equity share where the acquisition (unless notified otherwise) was entered into on or after 1 October 2004 and the transaction is not chargeable to Securities Transaction Tax under the Finance (No.2) Act, 2004; the change is proposed in the Finance Bill, 2017 and applies retrospectively from 1 October 2004.