Blogs
What's New Trending
What is capital gain tax in India?
Investment in a house property is one of the most sought-after investments primarily because you get to own a house. While others may invest to earn a profit upon selling the property in the future. It is important to note that a house property is regarded as a capital asset for income tax purposes. Consequently, any gain or loss incurred from the sale of a house property may be subject to tax under the ‘Capital Gains’ head. Similarly, capital gains or losses may arise from the sale of different types of capital assets such as stocks, mutual funds, bonds, and other investments. We will delve into the chapter on ‘Capital gains’ in detail here.
Budget 2024 Update
Budget 2024 has proposed the following amendments effective from FY 24-25 –
For classifying assets into long-term and short-term, there will only be two holding periods: 12 months and 24 months. The 36-month holding period has been removed.
The holding period for all listed securities is 12 months. All listed securities with a holding period exceeding 12 months are considered Long-Term. The holding period for all other assets is 24 months.
The taxation of short-term capital gain for listed equity shares, a unit of an equity-oriented fund, and a unit of a business trust has increased from 20% to 15%. Other financial and non-financial assets held for the short term shall continue to attract the tax at slab rates.
The limit on the exemption of Long-Term Capital Gains on the transfer of equity shares or equity-oriented units or units of Business Trust has increased from Rs.1 Lakh to Rs.1.25 lakh per year. However, the rate at which it is taxed has increased from 10% to 12.5%.
The exemption limit to Rs. 1.25 lakhs has been increased for the whole year, whereas the tax rate changed on 23rd July 2024.
The tax on long-term capital gains on other financial and non-financial assets is reduced from 20% to 12.5%. While on the other hand, the indexation benefit that was previously available on sale of long-term assets, has now been done away with. So, any sale of a long-term asset made after 23rd July 2024, will attract a tax rate of 12.5% only without indexation benefit.
