Sales value of the unreported transactions was computed at Rs 99,000 crore, while value of the under-reported transactions exceed Rs 4 lakh crore
Income-Tax (I-T) authorities have dismissed the demands to remove the long-term capital gains (LTCG) tax as more than 3.4 lakh investors are suspected to have evaded or did not report gains from equity shares and mutual funds (MFs), The Times of India reported.
The paper quoted an officer say that LTCG tax helps them track under-the-radar transactions which “explains why there is a demand for the abolition of it and Securities Transaction Tax (STT)”. “If LTCG is abolished, it will open a major loophole for tax avoidance,” the officer told ToI.
Moneycontrol could not independently verify the report.
An analysis by the I-T Department showed that 16 percent of taxpayers, or close to 91,000 individuals and Hindu Undivided Families (HUFs), did not file returns for sale of listed shares or MFs exceeding Rs 20 lakh, the paper said. The total sales value of these unreported transactions was computed at Rs 99,000 crore.
Besides this, around 44 percent taxpayers, or close to 2.5 lakh individuals and HUFs, reported no gains or under-reported returns from the sale of MFs. The total sales value of these under-reported transactions exceeded Rs 4 lakh crore.
No course of action has been decided by the government yet.
The officer added that repealing the tax within two years would “not be in line with consistency and continuity in the tax policy”, and further compared India’s 10-35 percent LTCG tax to ~95 percent slab levied by the United States, Canada, Australia, China and European countries.Under current norms imposed in 2018, capital gains of over Rs 1 lakh will be subject to 10 per cent LTCG tax plus cess, without indexation benefits, if sold after a year.