Budget 2024: Long Term Capital Profits Tax Rise From 10% to 12.5%

                The exemption limit for long-term capital gains tax has been increased to Rs 1.25 lakh from Rs 1 lakh. The budget also announced that listed financial assets held for more than a year 
will be classified as long-term.
The Union Budget for 2024-25 has hiked the long-term capital gains tax (LTCG) on all financial and non-financial to 12.5 percent from 10 percent, while short-term capital gains tax 
(STCG) on some assets would be 20 percent.
Further, the exemption limit for long-term capital gains tax has been increased to Rs 1.25 lakh from Rs 1 lakh. The budget also announced that listed financial assets held for more 
than a year will be classified as long-term.

"Short-term gains on certain financial assets shall henceforth attract a tax rate of 20 percent, while that on all other financial assets and all
non-financial assets shall continue to attract the applicable tax rate," Finance Minister Nirmala Sitharaman said during her Budget speech on July 23.

Long-term gains on all financial and non-financial assets, on the other hand, will attract a tax rate of 12.5 percent. Further, for the benefit of the lower and middle-income classes, the 
finance minister proposed to increase the limit of exemption of capital gains on certain financial assets to Rs 1.25 lakh per year.
Also, listed financial assets held for more than a year will be classified as long term, while unlisted financial assets and all non-financial assets will have to be held for at least two 
years to be classified as long-term.
Additionally, unlisted bonds and debentures, debt mutual funds and market linked debentures, irrespective of holding period, however, will attract tax on capital gains at applicable 
rates.
"On the macro side, the budget's approach of fiscal glidepath along with continual investment in infrastructure as well as some reduction in taxes for consumers is welcome," said 
Harish Krishnan, Co-Chief Investment Officer & Head Equity, Aditya Birla Sun Life AMC Ltd.
"However, these announcements have been overshadowed by changes made in terms of capital gains taxes. This certainly increases the hurdle rate for investors in financial assets, 
and hence there is a sentimental negative. Markets had gone up in the run-up to the event over the last few months, and hence, could result in some cooling off in financial markets 
before the focus moves back to corporate earnings, and the strength of Indian economy," Krishnan added.
Further, Sitharaman in Budget 2024 proposed to increase the rates of Securities transaction tax (STT) on the sale of an option in securities from 0.0625 per cent to 0.1 per cent of the 
option premium, and on the sale of a futures in securities from 0.0125 per cent to 0.02 per cent of the price at which such futures are traded.
Reacting to the tweaks in the capital gains structure, Indian equity markets crashed with Sensex falling more than 800 points. The index recovered a bit later to trade around 600 
points in the red.
On the increase in capital gains on financial assets, Sandeep Chilana, Managing Partner, CCLaw, said, “The FM has proposed to increase the rate of tax on both short-term and long-
term gains for certain financial assets. In the past few years, substantial investments have been made by retail investors in financial markets. Change in the rates of tax will likely have 
a significant impact on the sentiment of retail investors with respect to consistency in tax policy and doubt that even higher taxes may be imposed in future.”
Currently, equity shares or units of equity funds held for more than a year are subject to capital gains tax at 10 percent if LTCG exceeds Rs 1 lakh in a financial year.

Source : Money Control