I am having 100 listed shares in physical form which were acquire by me on 15-11-1999 & on 10-04-2008 it has been dematerialsed in my demat account. These shares are sold on 15-06-2008 by recognized stock exchange on which security transaction has been paid. So please let me know whether the gain arisen on sale of such shares is exempt under section 10(38) or it is chargeable to tax under section 111(A). Should we take the benefit of indexation also. Ajay Kumar , New Delhi
It is fact that you held the shares on 15/11/1999 , although in physical form. There fore , it was a long term capital asset in your hand from 15/11/1999.
Under the new scheme of purchase and sale , you opted for dematerializations of physical shares on 10/4/2008 , which does not change the ownership of those 100 shares. Its form changed only . So, if you sale this long term capital asset , it may give rise to long term capital gains or loss.
section 10(38) says if the shares are sold through stock exchange and STT is deducted by stock exchange, long term capital gains arising on account of such sale shall be exempt from tax.
Therefore, long term capital gains is exempt from tax . There is no need to claim for indexation benefit , which you are ,otherwise, eligible from FY 98-99 .
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