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.
The recently announced Union Budget of 2021 has introduced new tax implications for long-term capital gains (LTCG) and dividend income on equity and equity mutual funds. While LTCG will continue to be taxed if profits exceed Rs 1 Lakh, annual dividend income will now be taxable in the hands of the investor. This has caused concerns among investors, but there are some strategies to mitigate the impact of the new taxes on their portfolios.
After reports surfaced that the Income Tax department is planning uniform treatment for all asset classes once the new government takes charge, Union Finance Minister Nirmala Sitharaman debunked these rumours, calling them pure speculation. She took to social media to clarify that these claims were not verified by the Finance Ministry. Currently, India has differential tax structures for various financial assets, such as stock investments and fixed deposits. The proposed changes would aim to prevent tax base erosion and bring about a uniform treatment for all asset classes.