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Budget 2023 Expectations: Shorter holding period for non-equity funds, hike in equity LTCG limit to Rs 2 lakh

Simplifying the complex capital gains tax regime in India ranks high in Budget 2023 expectations. It can bring cheer to taxpayers and ensure sustained investor interest.

January 20, 2023 / 10:36 AM IST
Nirmala Sitharaman, PM Modi, Budget 2023

Nirmala Sitharaman, PM Modi, Budget 2023

A simple capital gains tax regime helps investors to understand and plan for tax costs while deciding on the investment.

The current capital gains tax regime in India is complex. The holding period to identify whether the capital gains earned is a long-term gain or short-term gain depends on the asset and the rate of taxes (see graphic).

Capital gains tax rates and threshold to determine the long-term tax relief are different across investments. Capital gains tax rates and threshold to determine the long-term tax relief are different across investments.

Indexation benefits are also asset-specific. With Budget 2023 round the corner, investors are hoping for a simpler system, which would be easy to calculate tax costs and minimise litigation and disputes.