Budget 2024 could unify equity, debt long term capital gain tax, holding period
interim budget 2024 before the Lok Sabha elections later this year. Over the last few years, capital gains taxation is one aspect of individual taxation which needed some reform. While some changes have been made over the years, the structure is still pretty complex and difficult to comply with for a layperson.
What the government can do to simplify capital gains taxation
a) The government may consider having a uniform holding period for all Indian domestic shares and mutual fund units (whether listed or unlisted/ equity or non-equity) for qualification as long-term capital asset. b) The long-term capital gains tax rate can be aligned at 10% and short-term capital gains tax at 15% for all types of financial assets (such as listed and unlisted equity / preference shares, equity oriented mutual funds and instruments like REIT/Invit units and other financial assets like debt oriented mutual fund units, bonds, debentures).
c) Indexation benefit may not be needed for long-term capital gains on sale of financial assets if the tax rates and holding period are aligned.
d) Allow set-off of long-term capital loss with short-term capital gains.
Also Read: Income tax changes by Modi govt in last interim budget
The government may also analyse and consider the capital gains tax regime followed by other countries while framing policies for simplification of the tax structure in India. For instance, Singapore does not tax capital gains income in general unless the same qualifies as business/ trading income. Similarly, Malaysia also does not tax capital gains income in general unless it is from disposal of real property located in Malaysia and gains derived from the sale of shares in closely controlled companies with substantial real
