Budget 2024: Short-Term, Long-Term Capital Gains Tax Hiked

The government has raised the short term capital gains tax and long term capital gains tax as part of Budget 2024.

Finance Minister Nirmala Sitharaman announced hiking tax on short term capital gains on listed equity shares, mutual funds that invest in equity shares, and units of business trusts to be raised to 20% from 15%.

Moreover, long term capital gains on all financial and non-financial assets will be taxed at 12.5% from 10% currently. However, it raised the limit of exemption of capital gains on some financial assets to Rs 1.25 lakh per year from Rs 1 lakh currently.

Listed financial assets held for more than a year will be classified as long-term and unlisted financial assets and non-financial assets must be held for at least two years to be classified as long-term, Sitharaman said.

The indexation available for the calculation of any long-term capital gains that are presently available for property, gold and other unlisted assets is also removed. "This will ease the computation of capital gains for the taxpayer and the tax administration," according to the Finance Bill presented in parliament.

Previously, long-term capital gains on non-financial assets were taxed at 20% with an indexation benefit.

The government also raised the securities transaction tax on futures and options to 0.02% and 0.1%, respectively.

The increase in LTCG rate is applicable with effect from July 23, 2024, while the STCG hike is applicable from Oct. 1, 2024.