Uniform LTCG tax duration for equity, property, gold likely

Uniform LTCG tax duration for equity, property, gold likely

New Delhi: In a major move, the government is likely to stipulate a uniform framework for all asset classes-equity, property and gold-for computation of capital gains. Among the Budget proposals being considered for the Union Budget is that the long term capital gains (LTCG) tax will be fixed at 24 months or two years uniformly for all asset classes.

This will be a major policy intervention as currently, the LTCG for equity is at 1 year, 2 years for property and 3 years for gold. Though it is not yet known, the tax treatment for LTCG may also see the consequent changes.

These asset classes more or less are the bulwark of the investment ecosystem in the country and a standard LTCG computation would introduce transparency and provide more clarity and simplicity of the regime for investors.

On gold, long term capital gains after the sale of gold kicks in after 3 years and is levied at 20 percent plus indexation benefits. The short term capital gains are levied at the sale of gold on a time duration of fewer than 3 years and are levied as per the tax slab of the assessee.

Profit from sale of gold bars, jewelry, coins or utensils or any other form of precious metal attracts tax under capital gains. The profit on the sale of gold holding is taxable under the head “Capital Gains” of Income Tax. The only exception to this is in the case of gold dealers who transact in gold as a part of their business, where profit on such transactions is taxable under the head “Income from business or profession”.

On property, currently, if a property is sold within 24 months, one has to pay a short term capital gains tax (STCG) on the gains as per an individual’s income-tax slab.

After 24 months, one has to pay an LTCG tax, which is charged at 20% with indexation benefits. Section 54 gives an exemption if there is a sale of a property and then another one is bought.

This exemption under section 54 is available when the capital gains from a property sale are reinvested into buying or constructing a maximum two houses. However, the capital gains on the sale of house property must not exceed Rs 2 crore in order to claim the exemption for reinvesting in two properties. This benefit can be claimed only once in a lifetime. (IANS)

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