Individuals and HUFs (Hindu Undivided Families) will not have to pay enhanced surcharge on capital gains tax on the sale of equity shares and equity-oriented mutual fund units.

"In order to stabilise the flow of funds into the capital market, it is provided that enhanced surcharge introduced by the Finance (No.2) Act, 2019 shall not apply on capital gains arising on sale of equity share in a company or a unit of an equity oriented fund or a unit of a business trust liable for securities transaction tax, in the hands of an individual, HUF, AOP, BOI and AJP," said Finance Minister Nirmala Sitharaman on Friday.

In July, the Finance Ministry had raised the surcharge rate on earnings over Rs 2 crore. With Friday's announcement, individuals and HUF taxpayers will no longer have to pay the higher rate of surcharge on the sale of equity shares and equity-oriented mutual fund which are liable for STT (Securities Transaction Tax).

The long-term capital gains (LTCG) tax was reintroduced on equity and equity-oriented investments in 2018 at a flat rate of 10 percent without indexation benefit.