Capital gains tax in India was reintroduced
in Union budget 2018 and has gone through slight changes since then. Ever since
the reintroduction, there has been a call for complete exemption or at least a
restructuring in taxation for long-term and short-term capital gains.
Nationalising
capital gains tax on various asset classes has emerged as a key demand ahead of
the Union Budget 2022-23, given the inconstancies that remain in this area over
the past few years.
Capital
gains tax in India was reintroduced in Union budget 2018 and has gone
through slight changes since then. Ever since the reintroduction, there has
been a call for complete exemption or at least a restructuring in taxation for
long-term and short-term capital gains.
Experts have suggested a series of measures that the government can
consider in the upcoming budget to rationalise taxes on capital gains.
REBATE FOR LONG-TERM CAPITAL GAINS ON EQUITY
One of the
demands suggested by experts is a rebate on long-term capital gains with regard
to equity products. According to experts, this will help promote investment in
equity products for the long term rather than short term bets. This will also
help promote the government’s vision of long-term investments, evident from the
lower tax rate applicable on long-term capital gains in comparison to
short-term capital gains.
RATONALISED
TAX RATE
There is a tax rate of 15 per cent on short-term capital gains on equity
products at the moment, unlike capital assets that are taxed at individual slab
rate. Therefore the short-term capital gains tax rate on equity is
significantly higher for taxpayers and experts feel this should be rationalised
and it should not be more than the slab rate applicable to the taxpayer.
HOLDING PERIOD
The holding period for financial products like bonds, debts funds, gold ETF
should be reduced to 24 months from 36 months with regard to long-term
categorisation. Apart from this, experts suggest that the holding period for non-financial
assets like land and building should be increased to 36 months.
Nationalising
capital gains tax on various asset classes has emerged as a key demand ahead of
the Union Budget 2022-23, given the inconstancies that remain in this area over
the past few years.
Capital
gains tax in India was reintroduced in Union budget 2018 and has gone
through slight changes since then. Ever since the reintroduction, there has
been a call for complete exemption or at least a restructuring in taxation for
long-term and short-term capital gains.
Experts have suggested a series of measures that the government can
consider in the upcoming budget to rationalise taxes on capital gains.
REBATE FOR LONG-TERM CAPITAL GAINS ON EQUITY
One of the
demands suggested by experts is a rebate on long-term capital gains with regard
to equity products. According to experts, this will help promote investment in
equity products for the long term rather than short term bets. This will also
help promote the government’s vision of long-term investments, evident from the
lower tax rate applicable on long-term capital gains in comparison to
short-term capital gains.
RATONALISED
TAX RATE
There is a tax rate of 15 per cent on short-term capital gains on equity
products at the moment, unlike capital assets that are taxed at individual slab
rate. Therefore the short-term capital gains tax rate on equity is
significantly higher for taxpayers and experts feel this should be rationalised
and it should not be more than the slab rate applicable to the taxpayer.
HOLDING PERIOD
The holding period for financial products like bonds, debts funds, gold ETF
should be reduced to 24 months from 36 months with regard to long-term
categorisation. Apart from this, experts suggest that the holding period for non-financial
assets like land and building should be increased to 36 months.