Budget 2023: Long term capital gains tax can become rational, know what is LTCG

Union Finance Minister Nirmala Sitharaman will present the country's general budget in Parliament on February 1. Before the Lok Sabha elections 2024, people have high hopes regarding this full-time budget. Out of these, the discussion regarding long term capital gains tax has also intensified.

Different departments have different expectations from the general budget which is going to be presented on February 1 . It is believed that in this budget, some big steps can be taken to support the farmers, promote agricultural activities and provide concessions to the public in rural areas. It is also believed that the Finance Minister will continue to focus on fiscal consolidation, domestic manufacturing, spending on infrastructure and increasing employment opportunities. On the other hand, it is also believed that the Finance Minister can make the tax on long term capital more rational.

According to experts, it is difficult for the government to cut taxes as there are many sectors of the economy that are still recovering from the concerns of Kovid, but simplifying long-term capital gains (LTCG) can and should be considered Need too. They believe that there are different tax rules and regulations for different asset classes. In such a situation, its structure can be further simplified to avoid common irregularities and reduce litigation.

It's Time To Simplify Taxes

Experts say the time has come to simplify the tax code for long term capital gains. To simplify the existing complex law, the government may bring all long-term assets under one regime. Stocks, bonds, gold and RE can be brought under the ambit of 15% and indexation benefit of 20%. This would mean that roughly if the stock is held for 7 years, the effective rate would still be close to 10 per cent. The lac received on equity should remain tax free as corporates are already paying dividend distribution. Apart from this, experts said that STT introduced in lieu of LTCG should be abolished.

What is long term capital gain? Long term capital gain is the profit made after the sale of a qualifying investment is called long term capital gain. This includes properties that have been owned by someone for more than 12 months at the time of sale. Investments that are made for 12 months or less are called short-term investments and the profit from them is called short-term profit. Long term capital gains are often favored more than short term gains.