NEW DELHI: Though the government may have avoided making too many changes in tax rules in the recent budget, it has hinted that it may undertake big changes in the capital gains tax structure. “The capital gains tax structure is complicated and it needs to be re-looked at. It has too many rates and periods,” Revenue Secretary Tarun Bajaj said in an interaction with industries on Wednesday.
Explaining the myriad of different periods and rates for capital gains tax, Bajaj said that while real estate attracts long-term capital gains after 24 months, in equities the same gets kicked in after 12 months. He said that the government is looking at how capital gains tax structure is at global levels — both in the developed as well as in the developing countries. He also asked the industry body, Confederation of Indian Industries (CII) to independently look at the issue and send its report to the government.
"Capital gain tax in India is charged at varied rates depending upon the type of asset and period of holding. Period of holding decides whether the gains are taxable as long-term capital gains (LTCG) or short-term capital gain (STCG). "
"Further, the STCG is taxable at slab rates, unless the same is arising on sale of equity shares or equity-oriented mutual funds (where STT has been paid) is taxable at 15%,” Rakesh Nangia, chairman of Nangia Andersen India, says explaining why the government might be planning to simplify the structure.
Bajaj said that in the current financial year, the government is likely to fetch Rs 60,000-80,000 cr in capital gains tax compared to Rs 6,000-8,000 cr in 2020-21.
The revenue secretary said that while the government has decided not to make too many changes in the existing tax structure, going forwards the focus of the government is to bring about major changes in personal taxation and GST.