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Capital Gains Tax: Preparation for changes in the structure to reduce the burden of taxpayers, what will be the effect on investors?


new Delhi. The government wants to reform the Capital Gains Tax Structure to increase its earnings and increase spending on welfare schemes. Two officials related to the matter gave information about this. In this proposal presented before the Finance Ministry, it has been said that the tax on income from capital market should not be less than the tax on income from business.

The government believes that levying more tax on earnings from business will result in a setback on the entrepreneurship and employment front. An official said legislative amendments are needed to make the capital gains tax structure more effective. This can be considered in the next budget.

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We don’t have any data like America

Another of these officials said that taxation and benefit transfer were the only two levels to deal with inequality on the tax front. We do not currently have any data related to this, but on the basis of data from countries like US, it can be said that the picture of difference in income after tax payment is very different from pre-tax, pre-transfer income as seen in the data. Is.

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tax disparity

The official said that there is a lot of disparity regarding tax on earnings. We have seen the capital gains tax structure in other countries and we cannot be different. The government estimates that in many countries, long-term capital gains are taxed at 25-30 per cent or slab basis.

It is important to pay attention to these before change

Tax experts say that the rate of capital gains tax in India is higher as compared to other emerging economies. This may reduce the attractiveness of investment in India. He says that the boom that has been seen in the capital market in recent times is due to the tax regime. EY’s Sudhir Kapadia says that before making any major changes in the tax regime, we have to keep in mind the global competitive environment as both people and capital are highly dynamic.

10 and 15 percent capital gains tax

10 per cent Long Term Capital Gains Tax is payable on gains above the limit of Rs 1 lakh on listed equities in the country for more than a year. Short term capital gains at the rate of 15 per cent are payable on shares held for less than one year. This provision is effective from 1st April, 2019.

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Revenue Secretary has also given signs of change

After the presentation of Budget 2022-23, Revenue Secretary Tarun Bajaj had said that the capital gains tax rule in the country is complex. It needs to be made easy. He had said that the government is ready to change various rates and holding period for computing capital gains tax on shares, loans and immovable property. The main reason for this is to simplify the system. Bajaj had said that the rate of capital gains tax and the holding period are complicated. The government has also made it. The holding period for capital gains tax is 24 months for real estate, 12 months for shares and 36 months for loans. In view of this huge gap, work needs to be done on it.

Tags: Central Government, income tax, Taxpayer


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