Finance Minister Nirmala Sitharaman announced significant changes to the taxation of capital gains in the 2024 budget. The aim is to rationalize and simplify the tax structure, impacting both short-term and long-term capital gains.
The tax on short-term gains from specified financial assets has been raised to 20% from 15%, while the tax rates for all other financial and non-financial assets remain unchanged. Long-term gains will now be taxed at 12.5% for all assets, up from previous rates. Additionally, the exemption limit for capital gains on certain listed financial assets has increased from ₹1 lakh to ₹1.25 lakh per year.
“To streamline the process and encourage investment, listed financial assets held for more than a year will be classified as long-term, whereas unlisted financial assets and all non-financial assets must be held for at least two years to receive the long-term classification,” Sitharaman explained.
Moreover, unlisted bonds, debentures, debt mutual funds, and market-linked debentures will attract taxes on capital gains at the applicable rates, regardless of the holding period. This new policy aims to bring uniformity and clarity to the taxation of various financial instruments.
The changes are set to take effect immediately, impacting investors and market participants nationwide.
News Desk
