Taxes on Capital Gain in India: Long term capital gain tax on earnings from shares and related investments has started from 2018. The government is earning a lot from this…
The government treasury gets a lot of income from capital gain tax on shares. The annual income from this tax had already reached close to Rs 1 lakh crore. Now the government has proposed to increase the capital gain tax in the budget, which is expected to fill the government treasury further.
The government told how much was earned
Minister of State for Finance Pankaj Chaudhary on Tuesday informed the figures of the government’s earnings from capital gain tax in the Rajya Sabha. He said that in the financial year 2022-23, the government had earned Rs 98,681 crore from long term capital gain tax on listed equities. This is about 15 per cent more than the income earned from long term capital gain tax on listed equities a year ago i.e. in the financial year 2021-22.
Long term capital gain tax is being levied since 2018
Long term capital gain tax is being levied on shares and share oriented mutual funds in India since April 2018. Till now the rate of this tax was 10 per cent. However, while presenting the budget recently, Finance Minister Nirmala Sitharaman has proposed to increase it to 12.50 per cent. Currently, there is no tax on capital gains up to Rs 1 lakh annually. That is, if there is a capital gain of more than Rs 1 lakh during a year, then there is a liability of long term capital gain tax. In this budget, it has also been proposed to increase the exemption limit to Rs 1.25 lakh.
This change was made regarding the holding period
Finance Minister Nirmala Sitharaman proposed many changes regarding capital gains tax in this year’s budget. They include increasing the rates of long term capital gain tax on listed equities and increasing the limit of annual income exempted from tax, as well as changing the time. Earlier, the holding period for long term capital gain tax liability was 12 months, which is now being increased to 24 months. On the other hand, the benefit of indexation being given to investors has been abolished.
Government’s income is going to increase due to the changes
Analysts believe that the government’s income is going to increase due to the changes made in the long term capital gain tax. By eliminating the benefit of indexation, the inflation-related benefit that investors get on investment will end. This will create more tax liability on them. Increasing the rates of long term capital gain tax will also increase the burden. At the same time, increasing the holding period and increasing the limit of income will also benefit some investors.
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