KAMDHENU ISPAT LIMITED - Securities and Exchange Board of India

k. Under Section 54 F of the Income Tax Act, 1961 long term capital gains ( in cases not covered under section
10(38) of The Act, ) arising to an individual or Hindu Undivided Family ( HUF ) on transfer of shares of the
company will be exempt from capital gain tax subject to other conditions, if the net consideration from such
shares are used for purchase of residential house property within a period of one year before and two year after
the date on which the transfer took place or for construction of residential house property within a period of three
years after the date of transfer.
l. Under Section 112 of the Income Tax Act, 1961 and other relevant provisions of the Act, Long Term Capital gins
( i. .e is shares are held for a period exceeding 12 months ) ( incase not covered under section 10(38) of the Act,)
arising on transfer of shares in the Company, shall taxed at the rate of 20 % ( Plus applicable surcharge and
education Cess ) after indexation as provided in the second provision to section 48 . The amount of such tax
should however, be limited to 10 % ( plus applicable surcharge and education cess ) without indexation, at the
option to the shareholder, if the transfer is made after listing of shares.
(C) FOREIGN INSTITUTIONAL INVESTORS:
a. In terms of section 10(34) of the Income tax Act, 1961, any income by way of dividends referred to in section 115
– O ( i.e. dividends declared, distributed or paid on or after 1 April, 2003 ) received on the shares of the company
is exempted from the tax.
b. In our opinion, the equity Share under this offer document constitute eligible shares and the benefit, as stated
above, would be available provided the above conditions are complied with.
c. The income by way of short term capital gains or long term capital gains (not covered under section 10(38) of the
Act) realized by FIIs on Sales of shares in the company would be taxed at the following rates as per section 115
AD of the Income Tax Act, 1961.
_ Short Term Capital Gains – 30 % (Plus Applicable Surcharge and Education Cess )
_ Long Term Capital Gains - 10 % Plus Applicable Surcharge and Education Cess (Without Cost Indexation and
protection against Foreign Exchange Fluctuation.
(Shares held in a company could be considered as a long term capital asset provided they are held for a period
exceeding 12 months )
d. Under Section 54 EC of the Income Tax Act, 1961, and subject to the conditions and to the extent specified
therein, long-term capital gains ( in cases not covered under section 10(38) of the Act,) arising on the transfer of
shares of the Company will be exempt from Capital gains tax if the capital gain are invested within a period of 6
months after the date of such transfer for a period of at least 3 years in bonds issued by
(a) National Bank for Agriculture and Rural development established under section 3 of the National bank for
Agriculture and Rural Development Act, 1981.
(b) National Highway Authority of India constituted under section 3 of the National Highway Authority of India
Act, 1988.
(c) Rural Electrification Corporation Limited, the company formed and registered under the Companies Act,
1956.
(d) National Housing Bank established under section 3(1) of the National Housing Bank Act, 1987; and
(e) Small Industries Development Bank of India established under section 3(1) of the Small Industries Development
Bank of India Act, 1989.
e. Under Section 54 ED of the Income Tax Act, 1961 and subject to the conditions and to the extent specified
therein, long term capital gains ( in cases not covered under section 10(38) of the Act, ) on the transfer of shares
of the company, as and when it is listed will be exempted from capital gains tax if the capital gain are invested in
shares of an Indian Company forming part of an eligible public issue, within a period of 6 months after the date
of such transfer and held for a period of at least one year. Eligible public issue means issue of equity shares
which satisfies the following conditions, namely –
(a) the issue is made by a public company formed and registered in India.
(b) the Shares forming part of the issue are offered for subscription to the public.
Subject to certain conditions laid down in Section 115AD of the Income Tax Act, Foreign Institutional Investors
will be charged to tax at 20% (plus Surcharge and Education Cess as applicable) on dividend from shares of the
Company, at 10% (plus Surcharge as applicable) on the Long Term Capital Gains arising from the transfer of the
shares of the Company and at 30% (plus surcharge as applicable) on Short Term Capital Gains arising from the
transfer of the shares of the Company.
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