In an attempt to protect genuine investments, the government plans to issue an “exhaustive list“ of transactions on which the “antiabuse“ provision of levying long-term capital gains tax on share transfer in unlisted companies will not apply .“We are taking information from all stakeholders and we will give a very exhaustive list where Section 10(38) will not be applicable. In the Budget, finance minister Arun Jaitley had proposed 10% long-term capital gains tax on those who acquired shares in unlisted companies after October 1, 2004, if they had not paid securities transaction tax (STT) at the time of purchase.The tax department has found that the route of long term capital gains in unlisted shares was being misused over the last two-to-three years. Chandra said out of 15 lakh companies incorporated, only 6 lakh companies file income tax returns. Of these, 2.5 lakh companies show losses or zero income and 2.85 lakh companies disclose income less than Rs 1 crore. Only Rs 36,500 companies file income tax returns, showing income over Rs 1crore.

Source: Economic Times February 07, 2017 05:15 UTC