Page 19 - Union Budget_2019

Union Budget 2019

Hence the benefit of tax neutrality would still be available for Ind-AS compliant companies in case demerger

even when the assets and liabilities are recorded at a value other than book value.

This amendment will take effect, from 1st April, 2020 and will, accordingly, apply in relation to the
assessment year 2020-21and subsequent assessment years.

This would eventually obviate the difficulties faced by Ind AS compliant companies with respect

taxation arising on account of demerger.

3.2 Concessional rate of Short-term Capital Gains (STCG) tax to certain equity-oriented fund of funds

In order to incentivise fund of funds set up for disinvestment of Central Public Sector Enterprises (CPSEs),
Finance Act, 2018 provided concessional rate of long-term capital gains tax under section 112A of the Act
for the transfer of units of such fund of funds.

Likewise, it is proposed to amend Section 111A so as to extend the concessional rate of tax for short-term
capital gains in respect of transfer of units of such fund of funds i.e. 15%.

Further, the definition of equity-oriented funds for the purpose of Section 111A shall be proposed to be
amended as follows: -

"Equity-oriented fund" means a fund set up under a scheme of a mutual fund specified under clause (23D)

of section 10 and, —

(i) in a case where the fund invests in the units of another fund which is traded on a recognised stock

exchange, —

(A) a minimum of ninety per cent of the total proceeds of such fund is invested in the units of such other

fund; and

(B) such other fund also invests a minimum of ninety per cent of its total proceeds in the equity shares of
domestic companies listed on a recognised stock exchange; and

(ii) in any other case, a minimum of sixty-five per cent of the total proceeds of such fund is invested in the
equity shares of domestic companies listed on a recognised stock exchange:

Provided that the percentage of equity shareholding or unit held in respect of the fund, as the case may be,

shall be computed with reference to the annual average of the monthly averages of the opening and closing
figures;

This amendment will take effect from 1st April, 2020 and will, accordingly, apply in relation to assessment
year 2020-21 and subsequent assessment years.
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