Your question has brought out an added complication of the DTC Draft guidelines on what constitues short term . The time frame for Short term capital gains has been revised to gains on investments held for less than a year AFTER the financial year in which the investment is made.

 

Example : Purchase date 1st April 2010 : Only sales made from 1st April 2012 onwards will become long term . Any sale on or before  31st March, 2012  will be categorized as short term capital gains .

 

Anthro

Suppose I bought some stock in August 2008 and I wish to sell it all off in 2012, then with the new direct tax code will I have to pay any taxes on the profit? I mean Direct Tax Code should logically apply to transactions after it is introduced as law NOT BEFORE IT.

 

And 2nd question is if the tax would indeed be applied on my sale(even if I sell 2 years or 3 years down the line from the date I purchased it in August 2008), then how much tax would I have to pay on it.

 

It is indeed sad(if it is true) that Long Term Capital Gains will also be taxed which have been invested into before the DTC was introduced...

 

The direct tax code bill, aimed at simplifying the country's archaic direct tax laws, is becoming the latest ground of policy giveaways and this time, it is the capital markets which will reap the harvest.

NDTV has learnt that the central board of direct taxes, or the CBDT, has decided to give up its proposal to tax gains arising out of sale of shares held for more than one year.

However, short term capital gains will continue to be taxed at 15 per cent, while the securities transaction tax will also be retained.

Government sources tell NDTV that in the run up to the preparation of the Bill, the issue of long-term capital gains tax had been the most contentious. The government's u-turn, has caught markets by surprise.

“This is quite a paradigm shift in the way the proposals were and now you are coming back to your original plan, that’s okay we intent to follow the same proposals so I would be guarded. May be we have to wait till Monday but yes this is something the market will be very keen and excited on. You just pay STT and you don’t pay long term capital gains tax,” said Vishal Anand, ED of PWC.
 
But all might not be that well on tax breaks for savings and investment schemes with the finance minister saying exemptions will be kept at the minimum.

The devil lies in the finer details, when the direct tax code bill will be introduced in the lok sabha on Monday. After which it is the parliamentary committee which will take over and after that it remains to be seen, what the committee suggests and whether the finance ministry will incorporate any of those recommendations.