According to a finance ministry income tax official, adjustments in capital gains tax in India are expected in the next budget. Speaking at a national capital event, the official predicted that India would exceed budget forecasts. For direct tax collection by 25-30% in fiscal year 2022-2023.
The Modi administration will likely overhaul the capital gains tax structure in the 2019 budget to increase revenue collections and spend on welfare programs.
The Central Government’s view that passive income gained from the capital market should not be taxed at a lower rate. Than income earned from running business, which involves taking entrepreneurial risks and job creation, is at the heart of the proposal being studied in the finance ministry.
The plan is also based on the Central Government’s concept of welfare, for which revenue must be increased.
“To make the capital gains tax structure more efficient, legislative changes are required.” This may be addressed in the next budget because it cannot be done on the spur of the moment,” an official previously stated. Long-term capital gains vs. short-term capital gains Long-term capital gains are currently taxed at 20% in general. Long-term capital gains on listed equities held for more than a year are taxed at 10% on the part of such gain that exceeds a threshold of Rs. 1 lakh in India. This provision went into effect on April 1, 2019.
The capital gains tax scheme specifies the holding time for assessing. Whether the gain realized on the sale of an asset is short-term or long-term.
Long-term assets include immovable properties such as land, buildings, and housing property. That have been owned for longer than 24 months. Long-term assets are debt-oriented mutual funds or jewelry held for longer than three years.
Short-term capital gains on listed equities held for less than a year are taxed at 15%. For listed shares and at the corresponding tax slab for unlisted shares.
Any asset held for less than three years is considered a short-term asset; however, certain assets are exempt.
A second official previously stated that taxation and welfare transfers were two levellers in the fight against income inequality. “We do not have the data in India,” the official explained. “But experience from countries such as the United States, where data is available, suggests that the picture of post-tax, post-transfer income inequality is quite different from the one painted by data on pre-tax, pre-transfer income inequality.”