Budget 2024: Long-term, short-term capital gains tax changes to fetch additional Rs 15,000 crore for government
Finance Minister Nirmala Sitharaman, in her 2024-25 Budget, proposed to rationalise the capital gains tax rate and holding period of various assets, including securities and immovable properties, in the 2024-25 Budget.
Revenue Secretary Sanjay Malhotra said on Tuesday, July 23 that the proposed modifications in capital gains tax rates in the Budget are expected to raise an additional Rs 15,000 crore for the exchequer.
Finance Minister Nirmala Sitharaman has recommended rationalising the capital gains tax rate and holding duration of different assets, including securities and immovable properties, in her 2024-25 Budget.
Listed financial assets will have to be held for more than one year, while unlisted financial assets and all non-financial assets for at least 2 years to qualify for long-term capital gains tax.
The long-term capital gains tax rate for numerous asset classes has been decreased to 12.5 pe cent, with the exception of unlisted bonds and debentures, which will be subject to appropriate slab rates.
Briefing reporters after the Budget presentation, Sitharaman said the government wanted to simplify the approach to taxation.
"...The average taxation has come down ... (to) 12.5 per cent... We have brought it down to the lowest (which) encourages investment in the market," Sitharaman said. Read full text of her Budget speech
However, the Budget proposes to increase short-term capital gains tax (STCG) on listed equity, equity-oriented mutual funds and units of a business trust to 20 per cent, from 15 per cent.
Malhotra said the marginal increase in capital gains tax will result in additional Rs 15,000 crore revenue.
Finance Secretary TV Somanathan said the capital gains tax regime has been made "very, very simple" in the Budget.
"Equities are at 20 per cent and everything else is it at the applicable rate for the short term. Yes short-term has gone up and long-term has been rationalised," Somanathan said.
With regard to the proposed increase in securities transaction tax (STT) in Futures and Options (F&O), Malhotra said it would be effective from October 1, 2024.
STT on the sale of an option has been hiked from 0.0625 per cent to 0.1 per cent of the option premium. The sale of securities in the futures market has been increased from 0.0125 per cent to 0.02 per cent of the price at which such futures are traded.
With agency inputs
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