Long-term capital gains on shares of private companies to be subject to concessional rate of tax@10% in the hands of non-corporate non-residents and foreign companies

[Section 112(1)(c)]

Effective from: A.Y. 2017-18

(i) Section 112(1)(c) prescribes a concessional tax rate of 10% (without indexation benefit) for long-term capital gain arising from transfer of unlisted securities in the hands of non-corporate non-residents and foreign companies.

(ii) For the purposes of this provision, the expression “securities” has the same meaning as in section 2(h) of the Securities Contracts (Regulations) Act, 1956.

(iii) Since some courts have opined that shares of a private company are not “securities”, section 112(1)(c) has been amended to provide that long-term capital gains arising to a non-corporate non-resident or a foreign company from the transfer of a capital asset, being shares of a company not being a company in which the public are substantially interested, shall also be chargeable to tax at the
concessional rate of 10%, without indexation benefit, in the hands of non-corporate non-residents and foreign companies.