The document outlines the special tax rates applicable to certain capital gains and incomes derived from specific securities under Indian tax laws. It details the applicable tax rates, eligible assessees, and the types of securities covered under various sections of the Income Tax Act, including Sections 111A, 112A, 115A, 115AB, 115AC, and 115AD. For instance, equity shares and units of equity-oriented mutual funds held by any assessee fall under Sections 111A and 112A, where long-term capital gains above ₹1 lakh are taxed at 10%, and short-term capital gains are taxed at 15%. Non-residents and foreign companies dealing in foreign currency bonds or global depository receipts have specific tax rates under Sections 115A, 115AB, and 115AC, typically ranging from 10% to 20% depending on the type of income, such as dividends, interest, or royalties. The document also clarifies that deductions under Chapter VI-A are generally not admissible, with certain exceptions, and basic exemption limit adjustments are available only to resident individuals and HUFs. These provisions, amended by the Finance Act of 2024, ensure that capital gains from these securities are taxed according to predefined rates, providing clarity to taxpayers on their obligations.
Determination of tax in certain special cases
Particulars |
Section 111A |
Section 112A |
Section 115A |
Section 115AB |
Section 115AC |
Section 115AD |
Eligible Assessee |
Any Assessee |
Any Assessee |
Non-Resident and Foreign Company |
Overseas financial organization (Offshore Fund) |
Non-Resident |
Foreign Portfolio Investor and Specified Funds |
Securities covered |
Equity sharesUnits of equity-oriented mutual fundUnits of business trust |
Equity sharesUnits of equity-oriented mutual fundUnits of business trust |
– |
Units of a mutual fund purchased in foreign currency. |
Foreign Currency Convertible Bonds (FCCBs)Foreign Currency Exchangeable Bonds (FCEB)Global Depository Receipts (GDRs) of an Indian company or Public Sector Undertaking (PSU) |
All securities other than units covered under Section 115AB. Specified securities include:
|
Tax Rate on Income from covered securities |
– |
– |
10% to 20% on dividend income, as the case may be4% to 20% on Interest Income, as the case may be20% on Royalty20% on Fees for Technical Services |
10% |
10% on Interest Income10% on Dividend Income |
5% / 20% – FPI10% – Specified Funds |
Tax rate on long-term capital gains |
– |
10% on capital gains above Rs. 1 lakh |
– |
10% |
10% |
10% on capital gains above Rs. 1 lakh, in case of specified securities10%, in any other case |
Tax rate on short-term capital gains |
15% |
– |
– |
– |
– |
15% on capital gains in case of specified securities30%, in any other case |
Admissibility of deduction under Chapter VI-A |
No |
No |
No, except under Section 80LA to a unit in IFSC and from royalty, and fees for technical services |
No |
No |
No |
Adjustment of basic exemption limit |
Available to resident individuals and resident HUF only |
Available to resident individuals and resident HUF only |
No |
No |
No |
No |
[As amended by Finance Act, 2024]
