Are any Capital Gains Exempt Under Section 10 ?

Capital Gains Exempt Under Section 10

Section 10 of Income Tax law provides list of incomes which are exempt from tax amongst those the major exemptions relating to capital gain are as follows:

• Section 10(33) of Income tax act: Long-term or short-term capital gain arising on transfer of units of Unit Scheme, 1964 (US 64) referred to in Schedule I to the Unit Trust of India (Transfer of Undertaking and Repeal Act, 2002 (58 of 2002) and where the transfer of such asset takes place on or after 01-04-2002.
• Section 10(37) of Income Tax Act : An individual or (HUF) Hindu Undivided Family can claim exemption in respect of capital gain arising from the transfer of agricultural land situated in an urban area by way of compulsory acquisition under any law or a consideration for such transfer is determined or approved by the Central Government of India or the Reserve Bank of India. This exemption is available if the land was used by the taxpayer (or by his parents in the case of an individual) for agricultural purposes for a period of 2 (Two) years immediately preceding the date of its transfer. Such income has arisen from the compensation or consideration for such transfer received by an assesses on or after the 01^st April, 2004.
• Section 10(37A) of Income Tax Act: An individual or Hindu Undivided Family (HUF) can claim exemption in respect of capital gain arising from the transfer of land or building or both under Land Pooling Scheme under the Andhra Pradesh Capital City Land Pooling Scheme (Formulation and Implementation) Rules, 2015 made under the provisions of the Andhra Pradesh Capital Region Development Authority Act, 2014 (Andhra Pradesh Act 11 of 2014) and the rules, regulations and Schemes made under the said Act. This exemption is available if an individual or HUF was owner of such land or building as on 02-06-2014.
• Section 10(38) of Income Tax Act: Long-term capital gain arising from the transfer of equity shares or units of an equity oriented mutual fund or units of a business trust other than a unit allotted by the trust in exchange of shares of a special purpose vehicle as referred to in section 47(xvii) of the act , will be exempt from tax, if the following conditions are satisfied (not applicable from A.Y 2019-20):
  • The asset transferred should be equity shares of a company or units of an equity oriented mutual fund or units of a business trust other than a units allotted by the trust in exchange of shares of a special purpose vehicle as referred to in section 47(xvii) of the act.
  • (STT) Securities transaction tax is paid at the time of transfer.
  • Such (Gain) asset should be a long-term capital asset.
  • Transfer should take place on or after the date on which Chapter VII of the Finance (No. 2) Act, 2004 comes into force.

Note: Any long-term capital gain arising/received from a transaction undertaken in recognized stock exchange located in an International Financial Services Center shall be exempt from tax and such exemption is available if consideration for such transaction is paid or payable in foreign currency, even if no Securities transaction tax (STT) is paid on such transaction.

Long term capital gain arising on the transfer of equity shares of a company is exempt from tax if the transaction of acquisition, other than the acquisition notified by the Central Government of India in this behalf, of such equity share is entered into on or after the 1st October, 2004 and such transaction is not chargeable to securities transaction tax under Chapter VII of the Finance (No. 2) Act, 2004 (23 of 2004) [Inserted by Finance Act 2017]

From A.Y 2019-20, Long term capital gain arising from transfer of equity shares/units of an equity oriented mutual fund/ units of a business trust on or after April 1, 2018 will not be exempt under section 10(38) of this act as this section has been withdrawn by Finance Act, 2018. Tax on such long term capital gain will be computed in accordance with the provisions of Section 112A of income tax act.

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