Tax Relief to Unlisted Shares , Debentures & Bonds - Taxworry

Tax Relief to Unlisted Shares , Debentures & Bonds !Reviewed by Admin on May 31.Rating: 5.0Unlisted Shares , Debentures & Bonds Gets Lower Tax Relief ! Finance Act 2012 , as assented by the President ,has a great tax relief provision for investors in private companies shares , debentures ,bonds and other marketable securities

Finance Act 2012 has brought a great tax relief? for all Indian resident investors who have private limited company or closely held public company shares or have invested in debentures or bonds . This is because any sale of unlisted shares,bonds or debentures or marketable securities, after 01/04/2012 will have lesser tax liabilities thanks to the sudden new provision entry in the Finance Act 2012 . The tax relief which is brought in section 112 of the Income Tax Act , effective from 01/04/2012 (assessment year 2012-13 ) is that only 10 % of tax on long term capital gains on arising on sale of unlisted securities , shall be imposed.

The newly added tax relief provision u/s 112 as per Finance Act 2012 is as under :

In section 112 of the Income-tax Act, in sub-section (1), with effect from the 1st day of April, 2013,?

(A) in clause (c), for sub-clause (ii), the following sub-clauses shall be substituted, namely:?

?(ii) the amount of income-tax calculated on long-term capital gains [except where such gain arises from transfer of capital asset referred to in sub-clause (iii)] at the rate of twenty per cent; and

(iii) the amount of income-tax on long-term capital gains arising from the transfer of a capital asset, being unlisted securities, calculated at the rate of ten per cent on the capital gains in respect of such asset as computed without giving effect to the first and second proviso to section 48.?;

The aforesaid provision therefore makes it clear that only 10 % of the tax on long term capital gains is to be charged . It also makes it clear that the

1. Long term capital gains has to be computed without any indexation benefit .

2. The shares on unlisted shares are not the only financial instrument such get benefits , but even other securities which are within the definition of section 2(h ) of SCRA will get the benefit of lower tax of 10 % .

What is the meaning of securities for tax relief?

The newly inserted amendment to section 112 also contains Explanation which clarifies that meaning of securities will be the meaning as assigned by Sub-clause (i) of Clause (h) of Section 2 of the Securities Contracts (Regulation) Act, 1956 which is as under?:

?Securities? include ? (i) shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate;?

Thus , long term capital gains on bonds,debentures or other marketable securities are also having the facilities of lower tax @ 10 % in case of long term capital gains.

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