Budget 2022: Surcharge on long term capital gains capped at 15 percent

Budget 2022

The Finance Minister Nirmala Sitharaman announced the capping of the surcharge on the long term capital gains payable on capital assets, at 15 percent. This is expected to benefit taxpayers in high income tax slabs as well to investors in equity shares of start-ups.

Earlier the surcharge on LTCG was capped at 15 percent in case of listed stocks and equity mutual fund. Now the same gets extended to all assets. "The extension of this benefit to unlisted asset will help reduce the tax burden for investors in startups, manufacturing, bonds and other types of unlisted assets," says Rajesh Gandhi, Partner, Deloitte India.

This should benefit taxpayers with income more than Rs 2 crore per year and have income in the form of long term capital gains. Many high networth individuals invested in unlisted stocks and start-up companies. They will get taxed at a relatively lower rate on the LTCG realized on the sale of their unlisted shares. "The extension of tax incentives and capping of long-term capital gains will help start-ups and founders further," says Roopali Prabhu, CIO and Co-head P&S, Sanctum Wealth.

The finance minister has not changed the holding tenure for qualifying an asset as a long term asset, nor has she changed the base tax rate on the long-term capital gains.