Section 50CA –Prescription of exceptions from deeming of fair market value of shares for certain transactions
This section presently provides that where shares, other than quoted shares, have been transferred for consideration which is less than the fair market value of such shares, the fair market value shall be deemed to be the full of value of consideration for transfer of such shares.
It has been proposed to amend Section 50CA by insertion of a new proviso that would empower the Board to make rules to provide that the provisions of this section shall not apply to consideration received or accruing as a result of transfer of unquoted shares by such class of persons and subject to such conditions as may be prescribed.
This amendment will take effect from 1st April 2020 (AY 2020-21).
Concessional rate of Short-term Capital Gains (STCG) tax to apply to certain equity oriented fund of funds
It is proposed to amend clause (a) of Explanation to section 111A of the Act to broaden the meaning of “equityoriented fund” by providing that the concessional rate of tax for STCG (15%) shall also apply to equity oriented fund of funds.
This amendment will take effect from 1st April, 2020 (i.e. AY 2020-21).
Amendments to section 56(2)(viib) – extension of exemption to Cat II AIFs and treatment in case of failure to comply with exemption conditions
Section 56(2)(viib) presently does not apply when shares are issued to Category I AIFs. It is proposed to amend the section to also apply the exemption to Category II AIFs.
Further, relief had been provided to start-ups by notification by the Government based on fulfilment of certain conditions. To ensure that start-ups (and any other class of companies notified in future) comply with the conditions for exemption, a proviso is proposed to be inserted to provide that in the event of subsequent failure to comply with conditions, the sub-section shall become applicable in the year such failure takes place.
