Key changes in capital gains tax structure on the anvil : The Tribune India
PTI
New Delhi, 25 November
The Finance Ministry is rationalizing the long-term capital gains tax structure by bringing parity between related asset courses and revising the base yr for calculating indexation profit to make it extra related, an official mentioned on Friday.
Announcement seemingly in Budget
- Currently, shares held for a couple of yr entice a ten% tax on long-term capital gains
- Gains arising from the sale of immovable property and unlisted shares held for greater than 2 years and debt devices and jewelery held for greater than 3 years entice 20% long-term capital gains tax
- The income division additionally seems into the rationalization of the holding interval for calculating long-term capital gains
Currently, shares held for a couple of yr entice a ten% tax on long-term capital gains. Gains arising from the sale of immovable property and unlisted shares held for greater than 2 years and debt devices and jewelery held for greater than 3 years entice 20% long-term capital gains tax.
The income division is now the rationalization of the tax charges in addition to the holding interval for calculating long-term capital gains and an announcement is probably going in the 2023-24 finances to be offered in Parliament on February 1. A change in base yr for calculating inflation-adjusted capital acquire can also be being thought-about, the official added.
The index yr for capital gains tax calculation is periodically revised to make it extra related. The final revision happened in 2017 when the base yr was up to date to 2001.
As the costs of belongings improve over time, the indexation is used to reach at the inflation-adjusted buy value of belongings to calculate long-term capital gains for tax functions.
“The whole effort is to make capital gains tax structure simple and taxpayer friendly and reduce compliance burden. There is scope to bring parity in tax rates and holding periods for similar asset classes,” the official mentioned.
Under the Income Tax Act, gains from the sale of capital belongings – each movable and immovable – are topic to ‘capital gains tax’.
However, the Act excludes movable private belongings similar to automobiles, garments and furnishings from this tax. Depending on the interval in which an asset is held, the long-term or short-term capital gains tax is charged. The Act supplies for separate tax charges for each classes of earnings. The methodology of calculation can also be totally different for each the classes.
