You may see a big change in the rules of Capital Gains Tax. The government (Finance Ministry) has started its preparation. It can be announced in the budget next year. Actually, the government wants to increase its revenue. He needs money to spend on the welfare scheme. On the other hand, there are many loopholes in the existing rules of capital gains tax. English business news website Mint has given this news.
The capital gains tax rules are being reviewed in the Finance Ministry. The government is of the view that the tax rate on passive income from capital market should not be less than that of business income. The reason for this is that there are many types of risks associated with business. On the other hand, employment opportunities increase by starting a business.
A source told Mint, “Change in the capital gains tax structure would require amendments in the law. So the government wants to introduce this proposal in the next budget.” At present, the rules for capital gains are different on different assets. This confuses a lot of people.
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Long term capital gains tax is levied on holding of shares of companies listed on the stock exchange for more than one year. Its rate is 10 percent. However, this tax is applicable only on income of more than Rs 1 lakh in a financial year. This provision is effective from 1st April, 2019.
Time has been made the basis for fixing the rate of capital gains tax. It is divided into two parts – short term capital gains tax and long term capital gains tax. Short-term capital gains tax is levied on income from shares of listed companies if you sell the shares before one year of purchase. Its rate is 15 percent. In case of unlisted shares, the tax rate depends on your slab.
This year, Revenue Secretary Tarun Bajaj had said that the capital tax structure has become too complex. He pointed out the need to make it easy. In a conversation with industry representatives after the budget, he had said that in the financial year 2019-20, 80 percent of the long-term capital gains from shares were paid by those whose income was 50 lakh or more.
In many countries, the rate of long term capital gains tax is between 25 and 30 per cent or depending on the income tax slab of the taxpayer. High tax rates make it difficult to attract investments.
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