Govt. Releases FAQs on the New Capital Gains Taxation Regime

FAQs – New Capital gains Taxation regime

Subsequent to the changes proposed by Finance (No.2) Bill, 2024 in the Capital Gains taxation scheme, the government released FAQs on the e-filing website specifying the major changes, applicability, changes in the period of holding of various assets, and clarity on the roll over benefits on capital gains. The new provisions for taxation of capital gains come into force from 23.7.2024 and shall apply to any transfer made on or after 23.07.2024.
The key takeaways are as follows:

• There are only two holding periods now, i.e., 1 year and 2 years from the existing three holding periods.
• Indexation has been done away with for ease of computation with simultaneous reduction of rate from 20% to 12.5%.
• Rate for short-term STT paid listed equity shares, equity oriented mutual fund and units of business trust (Section 111A) has increased from 15% to 20%. Similarly, the rate for these assets for long-term capital gains (Section 112A) has increased from 10% to 12.5%.
• The exemption limit of 1 lakh for Long term capital gains on these assets is also increased to Rs. 1.25 lakh which will apply for FY 2024-25 and subsequent years.
• Parity between Resident and Non-resident.
• No change in roll over benefits ie., taxpayers can invest their gains in a house under section 54 or section 54F or in certain bonds under section 54EC.

Click Here To Read The Full Update