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Concessional rate of Short-term Capital Gains (STCG) tax to certain equity-oriented fund of funds.
In order to incentivise fund of funds set up for disinvestment of Central Public Sector Enterprises (CPSEs), Finance Act, 2018 has provided concessional rate of long-term capital gains tax under section 112A of the Act for the transfer of units of such fund of funds.
In order to further incentivise these funds of funds, it is proposed to amend section 111A so as to extend the concessional rate of tax for short-term capital gains in respect of transfer of units of such fund of funds.
This amendment will take effect from 1st April, 2020 and will, accordingly, apply in relation to assessment year 2020-21 and subsequent assessment years.
[Clause 32]
Concessional short-term capital gains tax extended to certain equity-oriented fund of funds, enhancing disinvestment incentives. The proposal amends section 111A to extend the concessional rate of short-term capital gains tax to transfers of units of specified equity-oriented fund of funds set up for CPSE disinvestment, bringing short-term tax treatment into alignment with the existing concessional long-term capital gains regime under section 112A; the amendment applies prospectively to assessment years commencing after the stated effective date.
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