SAVE INCOME TAX ON THE INCOME ARISING FROM SALE OF SHARES

If you have earned any income by way of sale of shares, you can save yourself from the tax implications. The income earned by way of sale of securities like shares, are subject to income tax but if you fulfill the conditions laid down in the section 10(38) of income tax act, 1965 you can save tax which ,may arise from the sale of shares

The conditions are as follows:

1.  The shares must be hold for more than 12 months

2.  Shares must be equity shares or unit of equity oriented fund

3.  Such transaction of sale must be entered into or after 01.04.2004

4.  Such transaction is chargeable to securities transaction tax

ANALYSIS

1.  This exemption is available to all assessee including foreign institutional investors and non residents

2.  Such shares must be held by assessee as capital assets not as stock in trade

3.  This exemption is available to equity shares or equity oriented units only

4.  It doesn’t cover securities like preference shares, debentures etc

If an assessee fulfills all the conditions as specified above, he can save his income so earned by way of sale of the above specified securities

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