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CS Executive · Tax Laws and Practice · Capital Gains

For section 198 of the Income-tax Act, 2025 to apply to long-term gains on an equity share in a company, which securities transaction tax condition must be satisfied (ignoring IFSC and notified exceptions)?

For an equity share, section 198 requires securities transaction tax to have been paid on both acquisition and transfer. Payment only on transfer suffices for units of equity oriented funds or business trusts, but not for shares, subject to IFSC and notified exceptions.

  1. ASTT paid only on transfer of the share
  2. BSTT paid only on acquisition of the share
  3. CSTT paid on both acquisition and transfer of the shareCorrect
  4. DNo STT requirement applies to equity shares

Explanation

Section 198(1)(c)(i) requires STT to have been paid on both acquisition and transfer for an equity share in a company. For units of an equity oriented fund or business trust, only payment on transfer is required, which is why the first option is wrong for shares.

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