Vistra India Update 361


Tax on long-term capital gains in certain cases- Modes of acquisition not covered

Section 10(38) (Section) of the Income Tax Act, provided that any capital gains arising from transfer of listed equity shares held for a period of more than 12 months is not taxable if the sale is subject to Security Transaction Tax (STT). Finance Act 2017 amended this Section. Post amendment, the exemption for the purpose of computation of capital gains will not be available if the shares are acquired on or after 1 October 2004 and such acquisition was not chargeable to STT. Central Government had also notified the negative list of transactions as detailed below for which the benefit of capital gains exemption will not be available.

(a) Acquisition of existing listed equity shares which are not frequently traded on an RSE by way of preferential issue

(b) Acquisition of existing listed equity shares otherwise than through an RSE

(c) Acquisition of unlisted equity shares during the period between the delisting and day immediately preceding the re-listing of such shares on RSE.

Further, the Notification also provided carve-outs to insulate the genuine acquisitions, for which exemption may be continued to be available.

The Finance Act, 2018 withdrew the exemption provided under section 10(38) of the Income-tax Act, 1961 (Act) and notified a new section 112A to tax long-term capital gains arising from transfer of listed equity shares in company or a unit of an equity oriented fund/ business trust at 10%, upon fulfilment of certain conditions.

The Central government has now notified that negative list of transactions and carve-outs notified in the erstwhile section 10(38), is also applicable to section 112A.

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Indian Accounting Standards 2nd Amendment Rules, 2018

Ministry of Corporate Affairs (MCA) notifies Ind AS Schedule III applicable to NBFCs. Schedule III will apply to NBFCs covered under Ind AS applicability. MCA has also amended the existing Division I (Indian GAAP) & Division II (Ind AS) Schedule III. Ind AS Schedule III changes require companies preparing Ind AS financial statements to give additional disclosures related to trade receivables, loans receivables and trade payables and also comply with the disclosure requirements under the Micro, Small and Medium Enterprises Development Act, 2006

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Publishing of rate of exchange for conversion of the foreign currency

The Central Board of Excise and Customs (CBEC) vide Notification No. 85 /2018 - Customs (N.T.) notified the rate of exchange for conversion of the foreign currency into Indian currency or vice versa for Export and Import of goods, with effect from 5th of October 2018.  The Notification is appended below for reference.

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