The Finance Ministry has denied recent claims about plans to increase the short-term capital gains (STCG) tax, calling the reports speculative and misleading. This denial follows a report from Moneycontrol suggesting a potential hike in the STCG tax rate in the coming years.
Budget 2024: Changes in STCG Tax Rate
In the Union Budget presented on July 23, 2024, the government increased the STCG tax rate on specific financial assets from 15 percent to 20 percent. This change affects financial assets held for less than a year, including shares and mutual fund units.
Ministry’s Official Statement
In response to the report, the Finance Ministry issued a statement refuting the claims. “The reports are incorrect, unduly speculative, misleading, and factually incorrect in their entirety,” the ministry stated.
Clarification on STCG Tax
Earlier, Moneycontrol had reported a government official’s opinion that short-term trading gains should not be equated with long-term investments and that the STCG tax rate of 20 percent was reasonable but could be higher. “STCG is not an investment. No reason why STCG should be at 20 percent. It can be higher,” the official had stated.
However, the Finance Ministry clarified there were no current plans to further increase the STCG tax rate beyond the 20 percent set in the recent budget.
Long-Term Capital Gains Tax Adjustment
Additionally, the Union Budget raised the tax-free limit for long-term capital gains on equity-related investments from Rs 1 lakh to Rs 1.25 lakh. This adjustment aims to benefit lower and middle-income groups and will be applicable from FY 2024-25 onwards.
Summary
The Finance Ministry has firmly denied any future plans to increase the short-term capital gains tax rate, ensuring taxpayers that the current rate of 20 percent will remain unchanged for the time being. This announcement aims to clear any confusion and provide stability for investors and traders in the financial markets.
For more updates on financial policies and budget changes, stay tuned.
Key Changes in Budget 2024:
| Aspect | Previous Rate/Limit | New Rate/Limit |
|---|---|---|
| STCG Tax Rate on Specific Assets | 15% | 20% |
| Tax-Free Limit on LTCG | Rs 1 lakh | Rs 1.25 lakh |
