Capital gains tax on private equity lowered

May 7th, 2012 - 8:18 pm ICT by IANS  

Pranab Mukherjee New Delhi, May 7 (IANS) The central government Monday announced the lowering of capital gains tax on private equity investments to 10 percent from the existing 20 percent.

“Currently, long term capital gains arising from the sale of unlisted securities in the case of Foreign Institutional Investors is taxed at the rate of 10 percent while other non-resident investors, including private equity investors are taxed at the rate of 20 percent,” Union Finance Minister Pranab Mukherjee said.

“In order to give parity to such investors, I propose to reduce the rate in their case from 20 percent to 10 percent on the same lines as applicable to Foreign Institutional Investors (FIIs),” Mukherjee said while initiating the debate on the Finance Bill for 2012-13 in the Lok Sabha.

In order to bring more depth in the capital markets through the listing of companies, the finance minister proposed to extend the benefit of tax exemption on long term capital gains to the sale of unlisted securities in an initial public offer (IPO).

“For this purpose, I propose to provide the levy of Securities Transaction Tax (STT) at the rate of 0.2 percent on such sale of unlisted securities,” Mukherjee said.

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