This exemption is only for

1.Equity Shares 

2.Units of Equity Oriented Fund

 

As per Section 10 (38)

Long Term Capital Gains

On

Sale of

Equity shares or Unit of Equity oriented funds

Is Exempt

if following conditions are satisfied

Shares must be sold on recognised stock exchange

      And

Equity oriented fund sold through recognized stock exchange or Sold to mutual fund

Type of Security

Sold through

Shares

Sold through Recognised stock exchange  
   
Equity oriented fund Sold through Recognised stock exchange
 Or 
Sold to Mutual fund 

 

(b) Security transaction tax (STT) is charged on transaction  

 

New Amendment

Following Transactions are exempt even if STT Not Paid

-v-

  • Acquisition of listed equity shares in a company which has been approved by the Supreme Court, High Court, National Company Law Tribunal, Securities and Exchange Board of India or Reserve Bank of India in this behalf
  • Acquisition of listed equity shares in a company by any non-resident in accordance with foreign direct investment guidelines issued by the Government of India
  • Acquisition of listed equity shares in a company by an investment fund referred to in clause (a) of Explanation 1 to section 115UB of the Act or a venture capital fund referred to in clause (23FB) of section 10 of the Act or a Qualified Institutional Buyer
  • Acquisition of listed equity shares in a company through preferential issue to which the provisions of chapter VII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 does not apply

-ev-

Following Transactions are exempt even if not sold on recognized stock exchange

-v-

acquisition through an issue of share by a company other than the issue referred to in clause (a) i.e. preferential allotment.

  • acquisition by scheduled banks , reconstruction or secularization companies or public financial institutions during their ordinary course of business
  • acquisition which has been approved by the Supreme Court, High Courts, National Company Law Tribunal, Securities and Exchange Board of India or Reserve Bank of India in this behalf
  • acquisition under employee stock option scheme or employee stock purchase scheme framed under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999
  • acquisition by any non-resident in accordance with foreign direct investment guidelines of the Government of India
  • where acquisition of shares of company is made under Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulation , 2011
  • acquisition from the Government
  • acquisition by an investment fund referred to in clause (a) to Explanation 1 to section 115UB of the Income-tax Act or a venture capital fund referred to in clause (23FB) of section 10 of the income-tax Act or a Qualified Institutional Buyer
  • acquisition by mode of transfer referred to in sections 47 or 50B of the Income-tax Act, if the previous owner of such shares has not acquired them by any mode referred to in clause (a) or clause (b) or clause (c) [other than the transactions referred to in the proviso to clause (a) or clause (b)].

Note:- 

For listed shares, the period of holding is 12 months to be classified as long term

Unlisted Shares are not covered in this exemption as they are not listed on Stock Exchange

Q9 A

Particular Amount
20/05/2013  
Shares purchased on stock exchange of reliance 20
Price per share 800
   
21/06/2015  
Shares sold on stock exchange of reliance 15
Price per share 900

Calculate Long Term Capital Gain

View Answer

Q9 B

Particular Amount
20/05/2013  
Shares purchased on stock exchange of reliance 20
Price per share 800
   
21/06/2015  
Shares sold on stock exchange of reliance 15
Price per share 700

Calculate Long Term Capital Gain/Loss

View Answer

Q9 C

Particular Amount
20/05/2015  
Shares purchased on stock exchange of reliance 200
Price per share 800
   
21/06/2015  
Shares sold on stock exchange of reliance 150
Price per share 820

Calculate Short Term Capital Gain

View Answer

Q9 D

CASE  CASE 1 CASE 2 CASE 3
Income From Salaries 800000 200000 320000
Income from Capital Gains      
Gross Total Income 800000 200000 320000
Less      
Deductions Chapter VIA 30000 30000 30000
Net Total income      
       
Taxable STCG      
Tax @ 15% on Sale of Shares      
       
Remaining Income      
       
Tax on Remaining Income      
Total Tax      
Rebate      
Net Tax      
Cess 3%      
Total Tax      
View Answer

 

 

  1. Income from Capital Gains
  2. Exemptions

About the Author

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CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 9 years. He also provides Accounts Tax GST Training in Delhi and Pune.