Premium| Listen to this article |
New Delhi: The capital gains tax regime has become too complicated and needs a relook, revenue secretary Tarun Bajaj said at a post-budget interaction with business leaders on Wednesday.
Bajaj said that the government has done some groundwork comparing the capital gains tax regime in India and other countries, and has sought suggestions from business leaders in the next three-four months.
Addressing business leaders at the interaction organised by industry body the Confederation of Indian Industry (CII), Bajaj said that an absolute fresh look was needed on the capital gains tax regime.
Bajaj said that the first issue warranting a fresh look was the capital gains tax rate itself and the second was the holding period as the framework has become “too complicated". “For real estate, we have made it (the holding period) 24 months, for shares, we have made it 12 months, for debt it is 36 months. So we really need to work on that," said Bajaj.
The capital gains tax regime prescribes the holding period for determining whether the gain made at the time of selling the asset is short-term or long-term. Short-term capital gain is taxed at a higher rate than long-term capital gain. The holding period and the tax rate differ as per asset classes whether it is property, movable assets like jewellery, listed shares and equity-oriented mutual funds or debt-oriented mutual funds. In certain assets like property, short term capital gain is taxed as per the income tax slab. Long-term capital gain from listed equity shares of more than ₹1 lakh attracts a 10% tax without the benefit of indexation or accounting for inflation.
Bajaj also said that one hurdle is that any tweak in the regime would mean there will be gainers and losers compared to the current regime. That becomes the difficult part, he said.
Never miss a story! Stay connected and informed with Mint. Download our App Now!!