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

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

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.