Section 198 — Tax on long-term capital gains in certain cases
(1) Irrespective of anything contained in section 197, the tax payable by an
assessee on his total income shall be determined as per the provisions of
sub-section (2), if—
( a) the total income includes any income chargeable under the head “Capital
gains”;
( b) the capital gains arise from the transfer of a long-term capital asset being
an equity share in a company or a unit of an equity oriented fund or a
unit of a business trust;
( c) securities transaction tax under Chapter VII of the Finance (No. 2) Act,
2004 (23 of 2004) has—
( i) in a case where the long-term capital asset is in the nature of an
equity share in a company, been paid on acquisition and transfer
of such capital asset; or
( ii) in a case where the long-term capital asset is in the nature of a unit
of an equity oriented fund or a unit of a business trust, been paid
on transfer of such capital asset.
(2) The tax payable by the assessee on the total income referred to in sub-section
(1) shall be the aggregate of—
( a) income-tax calculated on such long-term capital gains exceeding
` 125000 at the rate of 12.5%; and
( b) income-tax payable on the total income as reduced by long-term capital
gains referred to in sub-section (1) as if the total income so reduced were
the total income of the assessee.
(3) In the case of an individual or a Hindu undivided family, being a resident, where
the total income as reduced by long-term capital gains computed under sub-section
(1) is below the maximum amount which is not chargeable to income-tax, then,—
( a) such long-term capital gains shall be reduced by the amount by which
the total income as so reduced falls short of the maximum amount which
is not chargeable to income-tax; and
( b) the tax on the balance of such long-term capital gains shall be computed
at the rate as referred to in sub-section (2).
(4) The condition specified in sub-section (1)(c) shall not apply to a transfer under-
taken on a recognised stock exchange located in any International Financial Services
Centre and where the consideration for such transfer is received or receivable in
foreign currency.
(5) The Central Government may, by notification, specify the nature of acquisition
in respect of which the provisions of sub-section (1)(c)(i) shall not apply.
(6) Where the gross total income of an assessee includes any long-term capital gains
referred to in sub-section (1), the deduction under Chapter VIII shall be allowed
from the gross total income as reduced by such capital gains.
(7) Where the total income of an assessee includes any long-term capital gains
referred to in sub-section (1), the rebate under section 156 shall be allowed from
the income-tax on the total income as reduced by tax payable on such capital gains.
(8) For the purposes of this section, the expression “equity oriented fund” means a
fund set up under a scheme of a mutual fund specified in Schedule VII (Table: Sl.
No. 20 or 21) or under a scheme of an insurance company comprising unit linked
insurance policies to which exemption in Schedule II (Table: Sl. No. 2) does not
apply and—
( i) in a case where the fund invests in the units of another fund which is
traded on a recognised stock exchange,—
( A) a minimum of 90% of the total proceeds of such fund is invested
in the units of such other fund; and
( B) such other fund also invests a minimum of 90% of its total proceeds
in the equity shares of domestic companies listed on a recognised
stock exchange; and
( ii) in any other case, a minimum of 65% of the total proceeds of such
fund is invested in the equity shares of domestic companies listed on a
recognised stock exchange,
and, for the purposes of this clause,—
( I) the percentage of equity shareholding or unit held in respect of the fund,
shall be computed with reference to the annual average of the monthly
averages of the opening and closing figures;
( II) in case of a scheme of an insurance company comprising unit linked
insurance policies to which exemption in Schedule II (Table: Sl. No. 2)
does not apply, the minimum requirement of 90% or 65%, as the case
may be, is required to be satisfied throughout the term of such insurance
policy.
C.—New tax regime
Related sections
- Section 190 — Determination of tax where total income includes income on which no tax is payable
- Section 191 — Tax on accumulated balance of recognised provident fund
- Section 192 — Tax in case of block assessment of search cases
- Section 193 — Tax on income from Global Depository Receipts purchased in foreign currency or capital gains arising from their transfer
- Section 194 — [Ss. 115B, 115BB, 115BBF, 115BBG, 115BBH and 115BBJ of the 1961 Act]
- Section 195 — Tax on income referred to in sections 102 to 106
- Section 196 — Tax on short-term capital gains in certain cases
- Section 197 — Tax on long-term capital gains
- Section 199 — Tax on income of certain manufacturing domestic companies
- Section 200 — Tax on income of certain domestic companies
- Section 201 — Tax on income of new manufacturing domestic companies
- Section 202 — New tax regime for individuals, Hindu undivided family and others
- Section 203 — Tax on income of certain resident co-operative societies
- Section 204 — Tax on income of certain new manufacturing co-operative societies
- Section 205 — Conditions for tax on income of certain companies and co-operative societies
- Section 206 — Special provision for minimum alternate tax and alternate minimum tax
- Section 207 — Tax on dividends, royalty and fees for technical service in case of foreign companies
- Section 208 — Tax on income from units purchased in foreign currency or capital gains arising from their transfer
- Section 209 — Tax on income from bonds or Global Depository Receipts purchased in foreign currency or capital gains arising from their transfer
- Section 210 — Tax on income of Foreign Institutional Investors from securities or capital gains arising from their transfer
- Section 211 — Tax on non-resident sportsmen or sports associations
- Section 212 — Interpretation
- Section 213 — Special provision for computation of total income of non-residents
- Section 214 — Tax on investment income and long-term capital gains
- Section 215 — Capital gains on transfer of foreign exchange assets not to be charged in certain cases
- Section 216 — Return of income not to be furnished in certain cases
- Section 217 — Application of benefits under sections 212 to 216
- Section 218 — Tax on business income of Offshore Banking Units or International Financial Services Centre unit
- Section 219 — Conversion of an Indian branch of foreign company into subsidiary Indian company
- Section 220 — Foreign company said to be resident in India
- Section 221 — Tax on income from securitisation trusts
- Section 222 — Tax on income in case of venture capital undertakings
- Section 223 — Tax on income of unit holder and business trust
- Section 224 — Tax on income of investment fund and its unit holders
- Section 225 — Income from business of operating qualifying ships
- Section 226 — Tonnage tax scheme
- Section 227 — Computation of tonnage income
- Section 228 — Relevant shipping income and exclusion from book profit
- Section 229 — Depreciation and gains relating to tonnage tax assets
- Section 230 — Exclusion of deduction, loss, set off, etc
- Section 231 — Method of opting of tonnage tax scheme and validity
- Section 232 — Certain conditions for applicability of tonnage tax scheme
- Section 233 — Amalgamation and demerger
- Section 234 — Avoidance of tax and exclusion from tonnage tax scheme
- Section 235 — Interpretation