BUDGET 2024:
BUDGET 2024:
What needs to change in respect to CAPITAL GAINS? ‘Require an overhaul...’ | EXCLUSIVE
Puneet Mishra - Associate Partner - M&A Tax & Regulatory Services
Budget 2024: Around a fortnight later, union finance minister Nirmala Sitharaman will present the interim budget 2024 in Parliament. For the 6th straight time, FM Sitharaman will present the Budget for the upcoming fiscal on February 1, 2024, at 11:00 am.
While this will be an interim budget due to the upcoming Lok Sabha elections 2024, a final one will be presented in the Parliament when a new government is formed.
Budget 2024 Expectations: What Needs to Change in Respect to Capital Gains?
Profits or gains arising from transfer of a capital asset are called capital gains and are charged to tax under the head capital gains while filing income tax return.
According to Puneet Mishra, Partner, M&A Tax & Regulatory Services, BDO India, capital gains require an overhaul. Currently, capital gains are taxed as long-term or short-term based on their holding period, and the tax rates on these capital gains vary, creating complexity
“Rationalising and standardising the capital gains regime with regards to certain aspects e.g., streamlining of the holding period i.e. long-term or short-term, uniformity in long-term/short-term tax rates across various asset classes, a change in the base year for indexation for long-term capital gains, etc. would be favorable to the investor community at large,” he said.
Aligning these changes with the visions of the government for encouraging taxpayer-friendly initiatives such as common income-tax return forms, annual information statements, etc. could enhance overall compliance, Mishra added.
Further, there would need to be parity in the holding periods for both long-term and short-term classifications across similar asset classes, according to him. Currently, the holding period for long-term capital gains on listed equity shares is one year and three years for debt mutual funds.
Similarly, the tax rate on long-term for listed equity shares is 10 per cent, and 20 per cent on debt mutual funds which would need to be rationalised, he opined.
Source :- ET Now News
While this will be an interim budget due to the upcoming Lok Sabha elections 2024, a final one will be presented in the Parliament when a new government is formed.
Budget 2024 Expectations: What Needs to Change in Respect to Capital Gains?
Profits or gains arising from transfer of a capital asset are called capital gains and are charged to tax under the head capital gains while filing income tax return.
According to Puneet Mishra, Partner, M&A Tax & Regulatory Services, BDO India, capital gains require an overhaul. Currently, capital gains are taxed as long-term or short-term based on their holding period, and the tax rates on these capital gains vary, creating complexity
“Rationalising and standardising the capital gains regime with regards to certain aspects e.g., streamlining of the holding period i.e. long-term or short-term, uniformity in long-term/short-term tax rates across various asset classes, a change in the base year for indexation for long-term capital gains, etc. would be favorable to the investor community at large,” he said.
Aligning these changes with the visions of the government for encouraging taxpayer-friendly initiatives such as common income-tax return forms, annual information statements, etc. could enhance overall compliance, Mishra added.
Further, there would need to be parity in the holding periods for both long-term and short-term classifications across similar asset classes, according to him. Currently, the holding period for long-term capital gains on listed equity shares is one year and three years for debt mutual funds.
Similarly, the tax rate on long-term for listed equity shares is 10 per cent, and 20 per cent on debt mutual funds which would need to be rationalised, he opined.
Source :- ET Now News