Stories
Finance Minister Nirmala Sitharaman Open To LTCG Tax Review
- •Finance Minister Nirmala Sitharaman stated that the government is open to stakeholder views and debates regarding the long-term capital gains tax on equities.
- •SBI Research had previously recommended scrapping the LTCG tax on equities and increasing the qualifying holding period to 2 to 3 years to boost long-term investments.
- •Under current regulations, long-term capital gains exceeding Rs 1.25 lakh in a financial year from listed equities, equity mutual funds, and eligible ETFs are taxed at 12.5 percent.
- •Short-term capital gains on eligible investments sold within 12 months continue to be taxed at 20 percent.
- •Investors can utilize capital losses and the annual Rs 1.25 lakh exemption limit strategically to optimize their tax liabilities, though Securities Transaction Tax cannot be deducted from capital gains.
Key Questions Answered
Listed equity shares, equity-oriented mutual funds, and eligible domestic equity ETFs held for more than 12 months qualify for long-term capital gains treatment. Long-term capital gains exceeding Rs 1.25 lakh in a financial year are taxed at a rate of 12.5 percent, excluding applicable cess and surcharge.
Finance Minister Nirmala Sitharaman stated that the government is open to hearing stakeholder views, feedback, and debates concerning the long-term capital gains tax and securities transaction tax from both domestic and foreign investors.
Investors can apply the annual Rs 1.25 lakh exemption to aggregate long-term gains, while capital losses help lower tax liability. Short-term losses can offset both short-term and long-term gains, whereas long-term losses offset only long-term gains and can be carried forward for up to eight years.
