Tax Rates on Capital Gains
Introduction
Tax rates on capital gains depend on the type of capital asset, holding period, and assessee’s status. Short-term capital gains (STCG) are generally taxed at higher rates compared to long-term capital gains (LTCG).
Short-Term Capital Gains
General Rule:
- Taxed at normal slab rates applicable to the assessee.
Specified Listed Securities (Section 111A):
- Tax rate: 20% (15% if securities transferred before 23rdJuly 2024) if STT is paid at the time of transfer.
- Includes equity shares, equity-oriented mutual funds, and units of business trusts.
Long-Term Capital Gains
General Rule:
- Uniform tax rate of 12.5% (effective July 23, 2024).
- Indexation benefit abolished for assets transferred on or after July 23, 2024.
- Grandfathering provision: Resident individuals and HUFs, in respect of land or buildings acquired before July 23, 2024, may opt for taxation at 20% with indexation, if it is more beneficial.
Specified Listed Securities (Section 112A):
Tax rate: 12.5% (10% if securities transferred before 23rd July 2024) on LTCG exceeding Rs. 1,25,000 (STT must be paid).