A senior government official said Tuesday that the next budget will likely simplify the capital gains tax regime to adjust tax rates and holding periods across asset classes.Officials said the current capital gains tax structure was “complex.”
The long-term capital gains tax (LTCG) currently favors listed stocks, but other types of assets, including real estate, attract taxes at higher tax rates. must be retained for a period of time. “We need to rethink the structure of the capital gains tax in terms of tax rate and holding period. We will be open to structural changes,” the official said. “We are considering proposals from stakeholders.”The holding period for long-term capital gains tax is not less than 12 months for listed shares/debts, but not less than 24 months for unlisted shares and real assets. 36 months for real estate and debt funds and securities. Analysts expect the tax reform could lead to lower tax rates on gains on the sale of private stocks, real estate mutual fund units and even debt funds.
Investments in liability-oriented funds are considered long-term if they are held for at least three years, whereas real estate such as land must be held for at least two years to be classified as long-term and the income is taxed at 20%. Investments in real property held by him for less than two years are considered short-term and are taxable at the income tax rates applicable to individuals.