on genuine investments there is no capital gains

The transactions recognised by SEBI will be out of the ambit of the new rule introduced this year in the budget that provides for the imposition of capital gains tax if securities transaction tax has not been paid.

The final notification of the rule, which is in the works, will ensure that genuine investments such as employee stock options and off-market strategic acquisitions do not face tax.


To shield exemptions for genuine cases in which STT could not have been paid, it was provided that the government would notify situations in which the rule would not apply. But CBDT issued draft notifications specifying situations in which it would apply. Though the first and third provisions addressed key concerns, the second one on listed stocks not purchased over the exchange left the issue open-ended. 

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