Section 111A - Tax on transfer of specified short term capital asset

• Section 111A of the Income Tax Act, 1961 prescribes provisions regarding taxation of specified short term capital asset.

• Specified short term capital asset for the purpose of this section shall include a short term capital asset being an equity share in a company, unit of an equity oriented fund or unit of a business trust. 

• The transaction should have been entered into on or after 01.10.2004 and securities transaction tax (STT) should have been paid on such transaction. 

• If both the above conditions are satisfied, tax on such STCG shall be calculated at the rate of 15% and on balance income, it shall be calculated using the normal provisions.

• Where any such transaction is carried out on a recognized stock exchange located in IFSC and consideration is received or receivable in foreign currency, the requirement of paying STT shall not apply.

• Where balance income other than STCG u/s 111A is less than the basic exemption limit, then the unexhausted basic exemption limit shall be utilized against STCG u/s 111A. 

• No deduction under Chapter VI-A shall be allowed against STCG u/s 111A.

• However, there is no bar on claiming rebate u/s 87A on tax calculated on STCG u/s 111A.