New Delhi: There is an important update for the people investing in shares and mutual funds. Ahead of the Income Tax Return (ITR) filing season, the tax department has updated the information related to capital gains tax. The update is important because the tax rate on long term (LTCG) and short term (STCG) capital gains is different for different asset classes.
The Income Tax Department has stated that the tax rate changes as per the different set of incomes. There are some incomes on which special tax rates are applicable. Let’s see the capital gains tax rates as prescribed by the Income Tax Department, which includes long term (LTCG) and short term (STCG) capital gains tax on equities, foreign bonds and other income.
If an individual has sold shares or mutual funds after July 22, 2024, then the taxpayer has to pay new tax rates on these:
Tax on Long Term Capital Gain (LTCG): 12.5%
Tax on Short Term Capital Gain (STCG): 20%
Can section 80C, 80D be used to save tax?
The taxpayers who opted for the old tax regime, deductions like 80C (such as PPF, life insurance, home loan principal) and 80D (mediclaim premium) will not apply to capital gains income.
Who will get tax exemption?
If a resident individual or HUF (Hindu Undivided Family) has only below-mentioned capital gains as income and no other income, then the taxpayer will be eligible for the following exemptions:
New Tax Regime: No tax on income up to Rs 3 lakh
Old Tax Regime: Income up to Rs 2.5 lakh will be tax free
Meaning, if your capital gain income exceeds this limit, only then will it be taxed at the appropriate special rate.
| Description | Section 111A (Short Term Capital Gain – STCG) | Section 112A (Long Term Capital Gain – LTCG) | Section 115A (royalty and technical service fees) | Section 115AC (Proceeds from bonds/GDRs purchased in foreign currency) |
| Applicable to whom | Every taxpayer | Every taxpayer | NRIs and foreign companies only | NRI only |
| Applicable to which income? | – Equity Shares – Equity Oriented Mutual Fund Units – Business Trust Units | – Equity Shares – Equity Oriented Mutual Fund Units – Business Trust Units | , | – Foreign Currency Bond (FCCB) – Foreign Currency Exchangeable Bond (FCEB) – Global Depository Receipts GDR of PSU company |
| Tax rate on the relevant income | , | , | – 10% to 20% on dividend – 4% to 20% on interest – 20% on royalty – 20% on technical service charges | – 10% on interest – 10% on dividend |
| Tax Rate on Long Term Capital Gain (LTCG) | , | – 10% (if property sold before 23-07-2024) – 12.5% (if sold on or after 23-07-2024) Note: Only LTCG above Rs 1.25 lakh will be taxed | , | – 10% (before 23-07-2024) – 12.5% (23-07-2024 or after) |
| Tax Rate on Short Term Capital Gain (STCG) | – 15% (if sold before 23-07-2024) – 20% (if sold on 23-07-2024 or after) | , | , | , |
| Benefit from basic tax exemption limit (₹2.5 lakh / ₹3 lakh) | Available only to resident individuals and HUFs | Available only to resident individuals and HUFs | No | No |
| Avail deductions under Section VI-A (80C, 80D etc.) | No | No | No, except under Section 80LA (on IFSC units) and in certain royalty/fee cases | No |
The Indian tax department has updated capital gains tax rates for shares and mutual funds, effective July 22, 2024. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
