According to the Income Tax Act, Capital Gains Tax is levied on profits earned from the sale of both movable and immovable capital assets and industry bodies have been demanding simplification of the same.
The NDA government is now busy preparing for the Union Budget 2024 (full budget). Although the date of presentation of Budget 2024 is not clear yet, it is expected that Finance Minister Nirmala Sitharaman can present it in Parliament on 22 July 2024 this month. Everyone has high expectations from this budget and it also includes relief in capital gains tax. Let us know what indications are being received from the Finance Ministry regarding this?
This indication on capital gains tax
is that the general budget of Modi 3.0 is about to be presented. But people hoping for relief in capital gains tax may be disappointed this time too. According to a report published in Business Today, there is no possibility of review and simplification of the capital gains tax system at present. This proposal cannot be included in the Union Budget 2024-25.
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It said that the industry and experts are advocating a comprehensive review and rationalisation of the capital gains tax system across various asset classes, but according to sources, there are indications that the government is currently not keen to undertake such an exercise and change the existing classification.
Long standing demand, not expected at the moment
The report quoted a person familiar with the matter as saying that this is a huge exercise, which will have an impact on various asset classes and investments. Although there has been a demand for it in the last few years, it is not being planned right now and it can be started later. Currently, capital gains tax is levied on long term and short term basis, which depends on the holding period and is different for different asset classes. This tax is levied on stocks, mutual funds and capital assets.
Industry bodies have made this demand
According to sources, this issue has been raised in the pre-budget meeting with Finance Minister Nirmala Sitharaman, but no proposal is likely to come in the budget. Industry body FICCI has appealed to simplify the capital gains tax system in terms of LTCG tax rate and STCG tax rate in its pre-budget recommendations. EY India has also called for simplifying this tax and said that the complexity in its structure should be thought about.
What is capital gains tax and where is it applicable?
As per the Income Tax law, Capital Gains Tax is payable on profits earned from the sale of both movable and immovable assets. Capital gains tax on equity, loans and real estate is applicable at different rates and periods, which helps in understanding whether the gain is short-term or long-term.
