Post Budget 2024, There are some big changes in capital gain tax rules and rates. What is the new regime for capital gain tax? These capital gain tax rules will deeply impact withdrawal duration. Certainly, the capital gain rules will decrease take-home profit.
Let’s understand Capital gain tax with the help of examples.
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Budget 2024 – How Much Capital Gain is Tax-Free?
There are different capital gain taxes for different securities.
What is Capital Gain tax India?
Capital gains tax is a tax on the profit booked from selling assets such as stocks, equity mutual funds, bonds, real estate, and other investments.
Listed Securities
For listed securities, a holding period of 1 year is termed as Long term holding. Thus if you sell listed securities (such as stocks, equity mutual funds, Equity ETFs, Gold ETFs,Bond ETFs, Listed Bonds, REITs, InVIT, or Sovereign Gold Bonds ( SGB)) after completion of one year, it will be termed as Long Term Capital Gain. and it will be taxed.
Unlisted Securities
For Unlisted Securities holding period of 2 years is considered as Long term capital gain tax. Below are securities or assets that fall under this category.
- Debt Mutual Funds (Units bought before 1st April 2023)
- Foreign Equity Funds
- Unlisted Stocks (Indian or Abroad)
- Real Estate
- Physical Gold
- Gold Mutual Fund
Neither Long Term nor Short Term
few securities will be taxed atA Few securities will be taxed as per your tax slab rate. There is no holding period limitation on this. Whenever you sell you will pay capital gain tax as per your income tax slab rate.
- Debt Mutual Funds (UNits bought after 1st April 2023)
- Market Linked Debentures
- Unlisted Bonds or Debentures
When is the new capital gain tax applicable?
Post-budget capital Gain tax rules will be applicable on the sale of securities from July 23, 2024. For Securities sold before July 23, 2024, the old tax rules are applicable.
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How Capital Gain tax is Calculated?
Equity MF Capital gain Tax
Suppose Bestii Singh purchased Equity Mutual Fund in 2020 for Rs. 150000. Now the value of this fund is 312000.
Capital gain on MF/shares will be 312000-150000 = 162432
Now the taxes on gains upto Rs 1,25,000 are not taxable.
Gains above 1,25,000 is 37432. These gains will be taxed at 12.5%.
So Bestii will pay an LTCG (capital gain tax long term) of Rs. 4679.
Debt MF Capital gain Tax
Now Suppose Bestii Singh purchased Debt Mutual Fund in 2020 for Rs. 150000. Now the value of this fund is 312000.
His LTCG tax is 12.5% with no expemtion of 1.25 lac. Thus his entire gains are taxed at 12.5%.
Debt MF tax will be Rs. 20304
suppose he purchased it 2 years before then his entire capital gains tax short term will be added to his income and taxed as per his income tax slab rate.
How much Capital Gain is Tax Free?
In case of Equity MF/ Shares, If sold after 12 months, the gains are termed as Long Term Capital Gains. Capital Gain upto Rs. 1,25,000 is tax-free. There is an exemption on capital gains tax is 1.25 lac.
What is the capital gain tax on property?
For properties the Long term is calculated as 2 years. If a property is sold after 2 years, LTCG is 12.5%. Whereas if property is sold before completion of two years, the gains are taxed as per income slab rate.
