Concessional rate of tax for income from certain Global Depository Receipts

It is proposed to insert a new section 115ACA in the Income-tax Act relating to tax on income from Global Depository Receipts (GDRs) purchased in foreign currency or capital gains arising from their transfer.

The new section seeks to provide that on income by way of dividends or long term capital gains in respect of Global Depository Receipts of an Indian company purchased by a resident employee of such company in accordance with a notified employees stock option scheme, the income-tax payable shall be the at the rate of ten per cent. This concessional rate would only apply to the income from investments in Global Depository Receipts of a resident employee of a domestic company engaged in information technology software and information technology services.

If further seeks to provide that in the case of the aforesaid resident employee, no deduction shall be allowed under any other provision of the Income-tax Act in respect of such dividend income and long term capital gains.

It further seeks to provide that in the case of the aforesaid resident employee, no deducdtion shall be allowed under many other provision of the income-tax act in respect of such dividend income and long term capital gains.

It is also proposed to provide that while computing such long term capital gains, the first and second provision of sub-section (i) of section 48 will not apply.

In the Explanation to the new section the expressions "Global Depositor m
Receipts’ "Information Technology Software", "Information Technology Service" and "Overseas Depositor Receipts" have been defined.

The proposed amendment will take effete from I st. April, 2000, and will accordingly, apply in relation to assessment year 2000-2001 and subsequent years.