The Income Tax Department has recently updated the capital gains tax system, changing the rates of long-term capital gain and short-term capital gain. The new tax system will apply to those adopting both old and new tax regimes. The tax on investment in foreign currency bonds and equity has also been updated. This is also news for those investing in shares or mutual funds. Let’s understand in detail.
The Income Tax Department has clarified that these new taxes will not apply to everyone, which means that different slabs have been created for this. The new rules will apply to the sale of equity and shares from July 23 2024.
This Is The Change
The biggest change has been in the LTCG tax rate, which has increased from 10% to 12.5%. At the same time, the STCG tax rate has increased from 15% to 20%. The holding period for LTCG on listed equity and mutual funds is 12 months, and for unlisted shares, property, and gold, it is 24 months. Exemption of up to Rs 1.25 lakh on LTCG remains, but the indexation benefit has been removed from most assets. Special relief has been given for property. If the property is purchased before July 22, 2024, the taxpayer can choose 12.5% without indexation or 20% with indexation.
At the same time, STCG on foreign currency bonds and unlisted bonds will now be taxed at slab rates, while sovereign gold bonds will not be taxed on maturity or premature redemption. LTCG tax on debt mutual funds and gold ETFS is 12.5%, but the tax will be applicable based on the holding period.
The Benefit Of Tax Deduction
The new rules may increase tax liability. But even if you have chosen the old tax regime. You will not get an exemption from capital gains tax under sections 80c and 80d.
