Finance Minister Nirmala Sitharaman is set to present her seventh Budget 2024-25 on July 23. According to an Economic Times report, the government is likely to reduce the real estate holding period for long-term capital gains (LTCG) tax to 12 months, against 24 months currently. This will bring real estate investments on par with mutual funds and equities.
The ET report, citing a person privy to the deliberations, said the tax rates will, however, remain unchanged.
Currently, long-term capital gains are applicable if an investor holds real estate for over 24 months. The holding period for mutual funds (MFs) and equities is over 12 months, while that for gold and debt funds is over 36 months. Any investment below this period attracts short-term capital gains (STCG) tax.
STCG on real estate and gold/debt funds is as per the slab rate of the investor, while that on listed equities and MFs is 15 per cent. LTCG on real estate and gold/debt funds is 20 per cent with indexation benefit; while that on equities and MFs is 10 per cent (up to Rs 1 lakh LTGC is exempt).
“The Centre may take up a more detailed capital gains tax regime restructuring later after a wider discussion and consultations,” said the ET report citing the person.
The markets are keenly watching any change in the long-term capital gains tax.
“Markets would be keenly awaiting any adverse changes in the capital gain tax on equities. In case there is no change in capital gain tax it would be considered positive for Indian equity markets,” according to JM Financial Services Research.
