Changes in long term capital gains tax structure possible, Finance Ministry’s view on rationalization

According to sources, the government is trying to make the tax structure easy and tax-payers friendly. Along with this, equality in tax rates can also be considered.

Possible change in long term capital gains tax structure

Ministry of Finance Long Term Capital Gains Tax Framework ie long term capital gains tax Considering rationalizing the structure. An official said on Friday that for this, there is a preparation to bring parity between similar asset classes and to amend the base year for calculating indexation benefits. Currently, long-term capital gains on shares held for more than a year are taxed at 10 per cent.

Possible announcement in the budget

Long-term capital gains tax of 20 per cent is levied on sale of immovable property and unlisted shares held for more than two years and debt instruments and jewelery held for more than three years. The Department of Revenue is now considering rationalizing the tax rates as well as the holding period for computing long-term capital gains. It is likely to be announced in the general budget 2023-24 to be presented in Parliament on February 1.

Structure will be easy for taxpayers

The change in the base year for computing inflation-adjusted capital gains is also being considered, the official said. The index year for computing capital gains tax is revised from time to time to make it more relevant. The last revision took place in 2017, when the base year was made on 2001. The official said, “It is the endeavor of the government to make the capital gains tax structure simple and taxpayer-friendly and reduce the compliance burden. There is also scope to bring equality in tax rates.