Rich made most of long-term capital gains from equities in FY20: Revenue Secretary
Premium- Tarun Bajaj said that in the year 2019-20, people made Rs95,000 crore of long-term capital gains
NEW DELHI : Most of the long-term capital gain from equities in FY20 was made by people earning ₹50 lakh and more, Revenue Secretary Tarun Bajaj said on Monday, highlighting that the tax introduced in Finance Act of 2018 on long term capital gain has served as a fair tax.
Long term capital gains on equities held for more than a year is taxed at 10% on the portion of such gain above a threshold of ₹one lakh. This provision was introduced with effect from 1 April 2019.
Addressing business leaders at a post budget interaction in Chennai led by finance minister Nirmala Sitharaman, Bajaj said that in the year 2019-20, people made ₹95,000 crore of long term capital gain.
“Can you beat that? 80% of that long term capital gain was made by people earning ₹50 lakh and more," Bajaj said in response to a suggestion from an industry representative seeking relief on long term capital gains tax on equities.
Bajaj referred to the issue of income inequality while turning down the suggestion for relief which could benefit only the high income groups. If any relief is given, it will only go to high earners going by the trend.
“I can assure you, it will not be 80%, it will be 90%, the way people have traded in the market this year. I think if we compare yourself with other countries, you will notice that other countries are charging LTCG at the applicable rate (as per the slab) or at 25-30%. These are the kind of taxes. In India we have 10%," said Bajaj, adding that giving long term capital gain tax relief will only increase money in the pockets of a few.
Earlier this month, Bajaj had said that the capital gains tax regime has become too complicated and needed a relook. The government has done some groundwork comparing the capital gains tax regime in India and in other countries and is keen to revamp the regime to make it simpler. Besides, the government’s stated policy is to move away from tax breaks to a simpler and lower tax rate regime.
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 the long-term capital gain.
MINT PREMIUM See All
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.
Never miss a story! Stay connected and informed with Mint. Download our App Now!!