Capital Gains Tax after Indian Budget 2024
The Union
Budget 2024 brought significant reforms to India’s capital gains tax regime.
These changes aim to simplify the taxation structure, promote long-term
investments, and reduce tax arbitrage between different asset classes. Whether
you’re an investor in equities, mutual funds, gold, or real estate,
understanding these new rules is crucial for your future financial planning.
Major Changes in Capital Gains Tax after Budget 2024
Major Changes in Capital Gains Tax after Budget
2024
1. Short-Term Capital Gains (STCG)
- Equities & Equity Mutual
Funds:
- Old Rate: 15%
- New Rate (from July 23,
2024): 20%
flat
- Other Assets (real estate,
gold, debt funds):
- Continue to be taxed at individual
slab rates if sold within the short-term period.
2. Long-Term Capital Gains (LTCG)
- Unified Rate:
- Old Rates:
- 10%
on equity gains above ?1 lakh (without indexation).
- 20%
with indexation on other assets (like property, gold, debt funds).
- New Rate: 12.5% flat on all
long-term capital gains, without indexation benefit.
- Revised Exemption:
- The annual exemption limit
for LTCG on equities increased from ?1 lakh to ?1.25 lakh.
3.Holding Periods Streamlined
Asset Class |
Short-Term |
Long-Term |
Listed
equities & equity mutual funds |
12
months |
12
months |
Other
assets (property, gold, debt) |
24
months |
24
months |
This
uniformity replaces the earlier multiple holding periods, making tax planning
simpler.
Other Noteworthy Changes
Ø Buyback of Shares
·
Buybacks
done after October 1, 2024, will be treated as deemed dividends,
but taxpayers can now claim the purchase cost as a capital loss against
other gains.
Ø Gifts & Transfers
·
Gifts
received from entities (other than individuals or HUFs) are no longer exempt.
They will now be taxed under capital gains.
Table of New Tax Rates
Table of New Tax Rates
Asset Type / Gains |
Holding Period |
Before Budget 2024 |
After Budget 2024 |
Equities
/ Equity MF (STCG) |
< 12
months |
15% |
20% |
Equities
/ Equity MF (LTCG) |
? 12
months |
10%
(above ?1 lakh) |
12.5% (above ?1.25 lakh) |
Other
Assets (LTCG) |
? 24
months |
20%
with indexation |
12.5%
without indexation |
Other
Assets (STCG) |
< 24
months |
Slab
rates |
No
change |
Long-term
investors
- Benefit from a simplified
single tax rate of 12.5%, but lose indexation on assets like property and
gold.
Short-term traders
- Will now pay a higher tax on
equity gains at 20%, making quick trades more expensive.
Property
& Gold sellers
- Will see higher taxable
gains without indexation, especially impactful for long-held assets.
Small equity investors
- Get slight relief with an
increased exemption threshold from ?1 lakh to ?1.25 lakh.
Conclusion
The
Indian Budget 2024 has overhauled the capital gains tax landscape. While the
simplified structure is a positive move, the removal of indexation and higher
STCG rates means investors need to be more strategic. Whether you’re holding
stocks, mutual funds, real estate, or gold, reviewing your investment timeline
and seeking professional advice could help you minimize your tax outflow under
this new regime.