CAPITAL GAINS TAX (CGT)

CAPITAL GAINS TAX (CGT)

TOPIC: Economy

Context- In an almost 10-fold increase in tax collections from stock markets, the government is expecting to collect Rs 60,000-80,000 crore this financial year as a tax on capital gains in the stock markets as against Rs 6,000-8,000 crore in the previous fiscal.

Concept-

Capital Gains Tax:

• Under the Income Tax Act, gains from the sale of capital assets, both movable and immovable, are subject to ‘capital gains tax’.
• Movable personal assets such as cars, apparel, furniture are excluded from this tax.
• Equity shares or units of equity-oriented mutual funds held for more than 12 months are considered long-term, while house property held for 24 months is considered a long-term capital asset.
• Short-term capital gains are chargeable to tax at normal slab rates applicable to the taxpayer, except where such gain is arising from the sale of equity shares in a company or units of equity-oriented mutual fund or unit of a business trust (where STT has been paid), which attracts a tax of 15 per cent, while long-term capital gains in excess of Rs 1 lakh for equity is taxed at 10 per cent.