Long term capital gains on shares (Section 112A)
Long Term Capital Gain on equity shares was exempted u/s 10 (38) till 2017-18.
However, the above exemption encouraged the diversion of funds from important sectors like manufacturing, infrastructure etc. into capital markets. Also, many taxpayers misused this exemption which resulted in the loss of tax revenue due to abusive practices of certain taxpayers.
Hence to keep a check over the above issue, CBDT removed the exemption by introducing a new Section 112A with 10% tax on LTCG in excess of Rs 1 Lac on sale of listed equity or equity-related instruments (STT paid).