BACKGROUND
The Finance Act, 2018 (the "FA,
2018") introduced Section 112A into the Income Tax
Act, 1961 (the "Tax Act") with effect
from April 01, 2018 wherein it stipulated that the capital gains of
more than INR 1,00,000 received for alienation of equity shares of
a company shall be taxable at the rate of 10%, provided
that the Securities Transaction Tax
("STT") should be paid at the time of
acquisition as well as transfer of such equity shares. However, the
Government was supposed to notify certain modes of acquisition of
shares wherein the requirement to pay STT at the time of
acquisition would not apply. Accordingly, the Central Board of
Direct Taxes ("CBDT") issued a draft
notification on April 24, 2018 ("Draft
Notification")1 wherein it specified rules
and exceptions with regard to payment of STT in relation to certain
transactions. A detailed analysis on the Draft Notification can be
found in our hotline available here.
