What are the implication of STT paid on share?
3 Replies
CA. Sourav Sarkar
(Chartered Accountant )
(24583 Points)
Replied 05 May 2021
When STT levy was introduced in 2004, simultaneously new Section 10(38) was introduced to benefit taxpayers who would incur STT. As per Income-tax Law, for transactions undertaken until 31 March 2018, any capital gain on sale of shares or equity oriented mutual fund units (EOMF) which are subject to STT is taxed at beneficial/Nil rate.
While long term capital gain (if shares or EOMF are held for > 12 months) are exempt from tax, short term capital gain on such securities are taxed at concessional rate of 15%. However, in order to prevent abuse of exemption provisions by certain persons for declaring their unaccounted income as exempt long-term capital gains by entering into sham transactions, Finance budget 2018 proposed to withdraw the exemption on long term capital gain and tax long term capital gains on equity shares and EOMF at concessional rate of 10% with respect to transfer effected on or after 1 April 2018.
However, gains accrued till 31 January 2018 are grandfathered i.e., in case of transfers upto 31 January 2018, cost of acquisition of shares or EOMF acquired before 1 February 2018 will be replaced by fair market value as on 31st January 2018.
Tax on business income
In case of person who is trading in securities and offering income/loss from such trading as business income, STT paid is allowed to be deducted as business expense.
While long term capital gain (if shares or EOMF are held for > 12 months) are exempt from tax, short term capital gain on such securities are taxed at concessional rate of 15%. However, in order to prevent abuse of exemption provisions by certain persons for declaring their unaccounted income as exempt long-term capital gains by entering into sham transactions, Finance budget 2018 proposed to withdraw the exemption on long term capital gain and tax long term capital gains on equity shares and EOMF at concessional rate of 10% with respect to transfer effected on or after 1 April 2018.
However, gains accrued till 31 January 2018 are grandfathered i.e., in case of transfers upto 31 January 2018, cost of acquisition of shares or EOMF acquired before 1 February 2018 will be replaced by fair market value as on 31st January 2018.
Tax on business income
In case of person who is trading in securities and offering income/loss from such trading as business income, STT paid is allowed to be deducted as business expense.
Shubham Garg
(18 Points)
Replied 05 May 2021
LTCG 112A
excess of 10% OR STCG 111A
following conditions
STT Paid on acq and TRF of equity share
STT Paid on transfer of eou and units of business TRUST
excess of 10% OR STCG 111A
following conditions
STT Paid on acq and TRF of equity share
STT Paid on transfer of eou and units of business TRUST
sukumar ghosh
(109 Points)
Replied 08 May 2021
Sir,
I am a Long Term investor earning income from Long Term Capital Gain for purchase & sale of Equity Shares more than 12th Months holding, paid STT on the both side purchase & sale can I add STT as cost of acquisition on purchase & deduct STT as expenditure on sales side.
need help.
I am a Long Term investor earning income from Long Term Capital Gain for purchase & sale of Equity Shares more than 12th Months holding, paid STT on the both side purchase & sale can I add STT as cost of acquisition on purchase & deduct STT as expenditure on sales side.
need help.
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