Budget 2023: The government is likely to rationalise the LTCG tax structure in the forthcoming Union Budget for 2023-24. As of now, shares held for more than one year attract a 10 per cent LTCG tax. This tax was discontinued in 2005. However, the government reintroduced it in 2018 in the Union Budget.

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The Finance Ministry is likely to be looking at ensuring parity between similar asset classes by rationalising the LTCG tax structure and even revising the base year for computing inflation adjusted capital gains, sources aware of developments said, according to a report by news agency IANS.

Gains from sale of immovable property and unlisted shares which have been held for more than two years, attract 20 per cent LTCG. The government may look at rationalising tax rates and also the holding period for calculating LTCG in the forthcoming budget, sources added.

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What is LTCG?

Long Term Capital Gains or LTCG is a tax paid on any capital asset held by taxpayers for more than 36 months or 3 years immediately preceding the date of its transfer is treated as a long-term capital asset.

However, in respect of certain assets like shares (equity or preference), units of equity-oriented mutual funds, listed securities like debentures and government securities and Zero-Coupon Bonds, the period of holding is 12 months.

Whereas, in the case of unlisted shares of a company and immovable property, being land or building or both, the period of holding is 24 months.

Exemptions under LTCG

Movable personal assets such as cars, apparel and furniture are excluded from the Capital Gains tax bracket.

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