An increase in short and long term taxes on capital gains is set to dig deeper into the pockets of investors. Long Term Capital Gains (LTCG) tax will be hiked from 10 to 12.5% while Short Term Capital Gains (STCG) tax on some assets will be increased from 15% to 20%, Finance Minister Nirmala Sitharaman announced while presenting the Union Budget 2024 this morning.
Indian equities reacted sharply to the capital gains tax hike with Sensex dropping over 500 points.
The government also proposed to raise the exemption limit on some financial assets to Rs 1.25 lakh year. The exemption limit was earlier Rs 1 lakh on long term equity gains.
Listed financial assets held for more than a year and unlisted financial and non-financial assets held for two years are classified as long-term, she said.
Unlisted bonds, debentures, debt mutual funds and market-linked debentures will be taxed according to specific tax slabs, added Ms Sitharaman.
Capital gains taxation will be simplified, announced Ms Sitharaman, adding that two-third of individuals have availed the new tax regime.
The government also proposed to abolish the angel tax, which is likely to boost the startup ecosystem in the country.
The government also proposed to merge the two tax exemption regimes for charities and reduce the TDS (tax deducted at source) rate on e-commerce from 1% to 0.1%.
The securities transaction tax (STT) on futures and options will be raised to 0.02% and 0.1% respectively.
