Shopper's Stop Limited - Securities and Exchange Board of India

7. Under section 54ED of the Income Tax Act and subject to the conditions and to the extent
specified therein, long term capital gains on the transfer of listed securities or units will be
exempt from capital gains tax if the capital gains are invested in equity shares forming part
of an eligible issue of capital, within a period of 6 months after the date of such transfer.
“Eligible issue of capital” means an issue of equity shares which satisfies the following
conditions, namely–
(i) the issue is made by a public company formed and registered in India;
(ii) the shares forming part of the issue are offered for subscription to the public.
If such equity shares are sold or otherwise transferred within a period of one year from the date
of acquisition, the amount of capital gains on which tax was not charged earlier shall be
deemed to be income chargeable under the head “Capital Gains” of the year in which the
equity shares are transferred.
B. To the Members of the Company:
Resident Members
1. In terms of section 10(34) of the Income tax Act, 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 by the
Company) is exempt from tax.
2. In accordance with section 10(23D) of the Income tax Act, all Mutual Funds registered under
the Securities and Exchange Board of India Act or set up by public sector banks or a public
financial institutions or authorised by the Reserve Bank of India, subject to the conditions
specified therein are eligible for exemption from income tax all their income, including income
from investment in the shares of the Company.
3. Under section 48 of the Income Tax Act, if the Company’s shares, being long term capital
assets (i.e. being held for more than twelve months), are sold, the long term capital gains if
any shall be calculated after indexing the cost of acquisition. Under section 112 of the
Income Tax Act, such long term capital gains shall be taxed at a rate of 20% (plus applicable
surcharge). The amount of such tax shall however, not exceed 10% (plus applicable
surcharge) without indexation, if the transfer is made after listing of the shares of the
Company.
4. Under section 54EC of the Income tax Act and subject to the conditions and to the extent
specified therein, long term capital gains arising on transfer of the shares of the Company
shall be exempt from tax if the gains are invested within six months from the date of transfer
in the purchase of a long term specified asset.
In such a case, the cost of such long term specified asset will not qualify for tax rebate under
section 88.
If the long term specified asset is transferred or converted into money at any time within a
period of three years from the date of acquisition, the amount of capital gains on which tax
was not charged earlier shall be deemed to be income chargeable under the head “Capital
Gains” of the year in which the specified asset is transferred or converted into money.
5. (a) Under section 54ED of the Income Tax Act and subject to the conditions and to the
extent specified therein, long term capital gains on the transfer of listed securities will be
exempt from capital gains tax if the capital gains are invested in equity shares forming
part of an eligible issue of capital, within a period of 6 months after the date of such
transfer. “Eligible issue of capital” means an issue of equity shares which satisfies the
following conditions, namely –
(i) the issue is made by a public company formed and registered in India;
(ii) the shares forming part of the issue are offered for subscription to the public.
We are informed that the equity shares under this offer document constitute eligible issue of
capital.
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