The Indian government has proposed a simplified capital gains tax structure in the Union Budget of 2024, which will have two durations of 12 months and 24 months to determine short-term and long-term capital gains. It also includes streamlined and uniform tax rates for most assets, while removing the indexation benefit for LTCG and increasing the exemption limit to Rs 1.25 lakh. The Central Board of Direct Taxes (CBDT) has released a list of FAQs for investors looking for more information on these changes.
Budget 2024: Simplified Capital Gains Tax Structure Introduced
In the Union Budget of 2024, the Indian government proposed a simplified capital gains tax structure aimed at streamlining and unifying tax rates, while also removing certain benefits and increasing the exemption limit.
Background
Previously, the capital gains tax treatment varied based on the duration of the asset holding period and the type of asset. This resulted in a complex and fragmented tax system.
Key Features of the Simplified Capital Gains Tax Structure
FAQs
1. What is the holding period for STCG and LTCG?
A. STCG is applied to assets held for up to 12 months, while LTCG applies to assets held for over 12 months.
2. What is the tax rate for STCG and LTCG?
A. For most assets, STCG is taxed at 15%, while LTCG is taxed at 10%, without indexation.
3. Has the exemption limit for LTCG changed?
A. Yes, the exemption limit for LTCG on equity shares and equity-oriented mutual funds has been increased to Rs 1.25 lakh.
4. What assets are covered under the new capital gains tax structure?
A. The new structure applies to most assets, including equity shares, equity-oriented mutual funds, debt funds, real estate, and gold.
5. Does the new structure apply to past capital gains as well?
A. No, the new structure applies to capital gains arising from transactions entered into after April 1, 2024.
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