Section 111A - Tax on short term capital gains in certain cases - Income-tax Act, 1961

1 [Tax on short term capital gains in certain cases. 111A. (1) Where the total income of an assessee includes any income chargeable under the head Capital gains , arising from the transfer of a short-term capital asset, being an equity share in a company or a unit of an equity oriented fund 4 [ or a unit of a business trust ] and- ( a ) the transaction of sale of such equity share or unit is entered into on or after the date on which Chapter VII of the Finance (No. 2) Act, 2004 comes into force; and ( b ) such transaction is chargeable to securities transaction tax under that Chapter, 11 [ the tax payable by the assessee on the total income shall be the aggregate of (i) the amount of income-tax calculated on such short-term capital gains (a) at the rate of fifteen per cent. for any transfer which takes place before the 23rd day of July, 2024; and (b) at the rate of twenty per cent. for any transfer which takes place on or after the 23rd day of July, 2024; (ii) the amount of income-tax payable on the balance amount of the total income as if such balance amount were the total income of the assessee: ] Provided that in the case of an individual or a Hindu undivided family, being a resident, where the total income as reduced by such short-term capital gains is below the maximum amount which is not chargeable to income-tax, then, such short-term capital gains shall be reduced by the amount by which the total income as so reduced falls short of the maximum amount which is not chargeable to income-tax and the tax on the balance of such short-term capital gains shall be computed at the 12 [ rate as applicable in clause (i) ] . 7 [Provided further that nothing contained in clause (b) shall apply to a transaction undertaken on a recognised stock exchange located in any International Financial Services Centre and where the consideration for such transaction is paid or payable in foreign currency. ] 6 [ **** ] (2) Where the gross total income of an assessee includes any short-term capital gains referred to in sub-section (1), the deduction under Chapter VI-A shall be allowed from the gross total income as reduced by such capital gains. 10 [ **** ] 8 [ Explanation .-For the purposes of this section,- (a) equity oriented fund shall have the meaning assigned to it in 9 [ clause (a) of the Explanation to section 112A ] ; (b) International Financial Services Centre shall have the same meaning as assigned to it in clause (q) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005); (c) recognised stock exchange shall have the meaning assigned to it in clause (ii) of Explanation 1 to sub-section (5) of section 43. ] ***************** NOTES:- 1. Inserted vide Section 26 of the Finance (No. 2) Act, 2004 w.e.f. 01-04-2005 2. Substituted vide Section 21 of the Finance Act, 2008 w.e.f. 01-04-2009 before it was read as, ten per cent. 3. Substituted vide Section 42 of the Finance Act, 2012 w.e.f. 01-04-2009 before it was read as, ten per cent 4. Inserted vide Section 34 of the Finance (No. 2) Act 2014 w.e.f. 01-04-2015 5. Inserted vide Section 34 of the Finance (No. 2) Act 2014 w.e.f. 01-04-2015 6. Omitted vide Section 27 of the Finance Act 2015 w.e.f. 01-04-2016 before it was read as, 5 [ Provided further that the provisions of this sub-section shall not apply in respect of any income arising from transfer of units of a business trust which were acquired by the assessee in consideration of a transfer as referred to in clause (xvii) of section 47. ] 7. Inserted vide Section 49 of the Finance Act 2016 w.e.f. 01-04-2017 8. Substituted vide Section 49 of the Finance Act 2016 w.e.f. 01-04-2017 before it was read as, Explanation.- For the purposes of this section, the expression equity oriented fund shall have the meaning assigned to it in the Explanation to clause ( 38 ) of section 10 .] 9. Substituted vide Section 32 of the Finance (No. 2) Act 2019 w.e.f. 01-04-2020 before it was read as, the Explanation to clause (38) of section 10 10. Omitted vide Section 49 of the Finance Act 2023 w.e.f. 01-04-2023 before it was read as, (3) Where the total income of an assessee includes any short term capital gains referred to in sub-section (1), the rebate under section 88 shall be allowed from the income-tax on the total income as reduced by such capital gains. 11. Substituted vide Section 29 of the Finance (No. 2) Act, 2024 w.e.f. 23-07-2024 before it was read as, the tax payable by the assessee on the total income shall be the aggregate of- ( i ) the amount of income-tax calculated on such short-term capital gains at the rate of 2 [ fifteen per cent ] ; and ( ii ) the amount of income-tax payable on the balance amount of the total income as if such balance amount were the total income of the assessee: 12. Substituted vide Section 29 of the Finance (No. 2) Act, 2024 w.e.f. 23-07-2024 before it was read as, rate of 3 [ fifteen per cent ]