CBDT has notified Non-Securities Transaction Tax scenarios for 10% LTCG under section 112A

CBDT has issued Final Notification under section 112A(4) specifying nature of equity share acquisitions in respect of which requirement of payment of Securities Transaction Tax would not apply for 10% LTCG tax, no major changes vis-à-vis the draft notification;

The condition of chargeability to Securities Transaction Tax shall not apply to acquisitions of equity shares entered into i) before October 1, 2004 or ii) on or after the first day of October, 2004 other than the three ‘specified’ transactions’ [which are on the similar lines to CBDT’s notification under section 10(38)]; Similar to erstwhile Sec. 10(38) regime,

CBDT provides that LTCG taxation under section 112A shall be applicable in case of share acquisition (without Securities Transaction Tax) made by non-residents / venture capital funds under the specified situations, for share acquisition made under ESOP or approved M&A schemes and the SEBI guidelines; However, final notification additionally covers non-Securities Transaction Tax scenarios for share acquisition by mode of transfer under section. 45(3)/(4) [relating to capital contribution by partner, capital asset distribution under dissolution], apart from transfer referred under section. 47 / 50B [already covered by draft notification];

CBDT has clarified that this notification shall come into force with effect from 1st April, 2019 and shall accordingly apply in relation to AY 2019-20 and subsequent assessment years.

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