Income Tax Update: The Income Tax Department has updated the capital gains tax, including what are the new taxes on long term capital gain and short term capital gain. Let’s understand in detail.
The Income Tax Department has recently updated the capital gains tax system, in which the rates of long term capital gain and short term capital gain have been changed. The new tax system will be applicable to those adopting both old and new tax regimes. What has been updated in the tax on investment in foreign currency bonds and equity. This is also news for those investing in shares or mutual funds. Let’s understand in detail.
It has been made clear by the Income Tax Department that these new taxes will not be applicable to everyone. Meaning that different slabs have been created for this. The new rules will be applicable on the sale of equity and shares from 23 July 2024.
This is the change
The biggest change has been in the LTCG tax rate, which has now increased from 10% to 12.5%. At the same time, the STCG tax rate has increased from 15% to 20%. The holding period for LTCG on listed equity and mutual funds is 12 months and for unlisted shares, property, gold it is 24 months. The exemption of up to Rs 1.25 lakh on LTCG remains, but the indexation benefit has been removed from most assets. Special relief has been given for property. If the property is purchased before 22 July 2024, the taxpayer can choose 12.5% ​​without indexation or 20% with indexation.
At the same time, STCG on foreign currency bonds and unlisted bonds will now be taxed at slab rates, while sovereign gold bonds will not be taxed on maturity or premature redemption of LTCG. LTCG tax on debt mutual funds and gold ETFs is 12.5%, but tax will be applicable based on the holding period.
Tax deduction benefits
The new rules may increase tax liability. But even if you have opted for the old tax regime, you will not get exemption in capital gains tax under sections 80C and 80D.
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