New Delhi, Sept. 3 -- The Securities and Exchange Board of India's proposal to introduce a 'Transmission to Legal Heirs' (TLH) code seeks to end a persistent misclassification that has saddled families with wrongful capital gains taxes.

Experts call it a long overdue structural correction, but warn the fix is procedural and will be tested in implementation and legal alignment across statutes. Mint explains:

Transfers of securities to heirs are often misclassified as taxable sales despite the Income Tax Act, 1961 explicitly exempting them, said Prateek Bansal, partner at White and Brief Advocates and Solicitors.

As a result, the nominee in such transfers, who is merely a trustee, is wrongly assessed for capital gains on assets they neve...