New Delhi: The Centre is planning to revamp the capital gains tax structure in the next budget to make it simpler, including the rationalisation of the multiple holding periods.
Citing officials with knowledge of the matter, the ET mentioned that uniformity within asset classes will be an important factor in the review that may even think tweaks in the tax rate.
“The capital gains tax regime is slightly complex. There is a case for simplifying and rationalising it,” a government official familiar with the matter told the financial daily, adding that the direct tax task force report of 2019 may be a starting point for the proposed exercise.
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The official further mentioned that a final decision on the rationalisation of the multiple holding period and the rates would be taken at the highest political level closer to the Union Budget.
The Budget for FY24 is scheduled to be presented on February 1, 2023 , and will be the last full Budget of the National Democratic Alliance (NDA) government in its second term before the next general elections.
As per the existing rules, equities and preference shares, equity-based mutual funds, zero coupon bonds, and Unit Trust of India (UTI) units are considered long-term assets if held for a period of over 12 months.
Debt-oriented mutual funds and jewellery held over 36 months are categorised as long-term assets. Real estate or immovable property is regarded as a long-term asset if held over 24 months.
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The government constituted task force, headed by former Central Board of Direct Taxes (CBDT) member Akhilesh Ranjan, had recommended three categories of assets: equity, non-equity financial assets, and all others including property. It suggested indexation benefits should given to all categories except equity.
The task force recommended long-term capital gains (LTCG) tax of 10 per cent for gains on the sale of equity assets held for more than 12 months. A 15 per cent short-term capital gains tax was proposed for equities held for a shorter period.
