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Capital Gain Taxation in Union Budget 2024-25
(Applicable for FY 2024-25)
What is Capital Gain?
Any profit arising from the sale of a 'capital asset' is known as capital gain and is taxable in the year of transfer. Losses are termed as capital losses.
Capital Assets include: Land (except agricultural land), buildings, shares, mutual funds, precious stones, ornaments (gold, silver, platinum), archaeological collections, drawings, paintings, sculptures, and other works of art. Personal-use items like private vehicles are excluded from capital assets.
Major Changes in Taxation of Capital Gains by Finance (No. 2) Bill, 2024
- Effective date: 23.07.2024
- Holding period simplified
- Rates rationalized and made uniform
- No change in rollover benefits (Sec 54, 54B, 54D, 54EC, 54F, 54G)
Holding Period for Determination of Capital Gains
| Capital Asset | Before 23.07.2024 | On or After 23.07.2024 |
|---|---|---|
| Land & Building | > 24 months - Long Term | > 24 months - Long Term |
| Shares, Listed Securities, etc. | > 12 months - Long Term | > 12 months - Long Term |
| Movable Assets (Jewellery, Art, etc.) | > 36 months - Long Term | > 24 months - Long Term |
| Unlisted Securities, Debt MF | > 36 months - Long Term | > 24 months - Long Term |
Tax on Selling Stocks
* Dividend and Derivative Trading (Futures, Options, etc.) are taxed as per individual's applicable slab.
Capital Gain Tax Rates Before 23.07.2024
| Capital Gain Type | Condition | Applicable Rate |
|---|---|---|
| Long Term | Listed Equity Shares (STT Paid) | 10% above Rs.1.25 Lakh |
| Long Term | Land or Building | 20% with indexation |
| Long Term | Others | 20% |
| Short Term | STT Not Applicable | Normal Slab Rates |
| Short Term | STT Applicable | 15% |
Capital Gain Tax Rates On or After 23.07.2024
| Capital Gain Type | Condition | Applicable Rate |
|---|---|---|
| Long Term | Listed Equity Shares (STT Paid) | 12.5% above Rs.1.25 Lakh |
| Long Term | Land or Building |
|
| Long Term | Others | 12.5% |
| Short Term | STT Not Applicable | Normal Slab Rates |
| Short Term | STT Applicable | 20% |
* Indexation benefit is removed for long-term capital assets transferred on/after 23.07.2024.
* Grandfathering provision allows indexation and 20% rate if more beneficial for property bought before 23.07.2024.
* Grandfathering provision allows indexation and 20% rate if more beneficial for property bought before 23.07.2024.
What is Section 87A Rebate?
Under Section 87A, resident individuals (excluding NRIs and super senior citizens) are eligible for a tax rebate.
| Old Regime | New Regime |
|---|---|
| Rebate up to income of Rs.5,00,000 | Rebate up to income of Rs.7,00,000 |
| Max rebate: Rs.12,500 | Max rebate: Rs.25,000 |
Applicability of Section 87A Rebate
- Slab income taxed normally
- LTCG under Sec 112 (excluding equity shares and equity MF)
- STCG on listed equity shares and equity MF under Sec 111A
At a Glance: Adjustment of Basic Exemption Limit
If resident individuals or HUFs do not exhaust the basic exemption limit through other income, it can be adjusted against both LTCG and STCG. NRIs are not eligible for this benefit.
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