FM raises Capital Gains exemption ceiling to ₹1.25 lakh

23 Jul 2024 , 01:03 PM

In Budget 2024, the capital gains exemption ceiling has been increased to ₹1.25 lakh, the STCG tax rate has been increased to 20%, and the LTCG rate has been raised to 12.5% on specified assets.

The finance minister, Nirmala Sitharaman, has suggested the following reforms to the capital gains tax regime:

• Short-term capital gains on specific assets will attract 20%, while all other financial and non-financial assets will be taxed at the corresponding income tax rate.
• I propose increasing the capital gains exemption ceiling to ₹1.25 lakh each year.
• LTCG on certain assets will be increased to 12.5%.
• Unlisted bonds and debt mutual funds will continue to be taxed at the applicable rate.

When an individual sells a capital asset, he or she may incur capital gains or losses under income tax regulations. These capital gains or losses are classified as short-term or long-term based on the nature of the capital asset and the time of holding stipulated for this classification.

The abbreviations for long-term capital gains, long-term capital losses, short-term capital gains, and short-term capital losses are LTCG, LTCL, STCG, and STCL, respectively.

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