There are 5 broad parameters in the capital Gains Tax Treatment introduced-
- Holding period has been simplified. There are only two holding periods now, viz. 1 year and 2 year.
- Rates have been rationalised and made uniform for the majority of assets. \
- Indexation has been done away with for ease of computation with simultaneous reduction of rate from 20% to 12.5%.
- Parity between Resident and Non-resident.
- No change in roll over benefits.
The new provisions for taxation of capital gains come into force from 23rd July 2024 and shall apply to any transfer made on or after 23rd July 2024.
Holding Period
There are only two holding periods; for listed securities, it is one year, for all other assets, it is two years.
Therefore, for listed units of business trusts (ReITs, InVITs) holding period is reduced from 36 months to 12 months.
The holding period of gold, unlisted securities (other than unlisted shares) is also reduced from 36 months to 24 months.
The holding period of immovable property and unlisted shares remains the same as earlier i.e. 24 months.
Capital Gains Tax Rate
Rate for short-term STT paid listed equity, Equity oriented mutual fund and units of business trust (Section 111A) has increased from 15 to 20%. Similarly the rate for these assets for long-term (S. 112A) has increased from 10 to 12.5%
The exemption limit of 1 lakh for LTCG on these assets has also increased to 1.25 lakh Rs. This increased exemption limit will apply for FY 2024-25 and subsequent years.
The rate for other long-term capital gains on all assets has been rationalized to 12.5% without indexation (Section 112). This rate was earlier 20% with indexation.
Roll Over Benefits
The roll over benefits remain the same as earlier. There is no change in roll over benefits already available under the IT Act
For roll over benefits, taxpayers can invest their gains in house under section 54 or section 54F or in certain bonds under section 54EC
Disclaimer- This is not taxation advice . You may consult your professional Tax Consultant or Chartered Accountant for detailed interpretation and information. This is meant for education and information purposes only. In case you wish to be connected to a Chartered Accountant on any query – you may write back to us and as our esteemed client we would facilitate that as a service to you.
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