The Central Government has started the process of bringing in parity in Long Term Capital Gains (LTCG) arising out of investment in shares. It also includes tax on gains from investments in debt, listed shares and unlisted shares. An English website report quoting sources said that the government has started discussions with all stakeholders to bring in equality in tax. Sources say that the long-term tax rate may change with the holding (investment) period. Senior tax officials are still studying the possibilities. Along with this, the impact on the revenue of the government is also being assessed. It is also being assessed how the possible changes will be implemented. According to the source, possible changes may be announced next year on which feedback from all stakeholders will be sought by the end of this year.
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Experts believe that the government will not change the tax rates on listed shares soon. But there is a need to rationalize the tax on gains from investments in listed, unlisted and debt instruments. Also, the tax on Indians and non-resident Indians will be rationalised. If the tax rates on short-term and long-term capital gains arising from listed shares are hiked, it will affect potential retail and foreign investors. Their attractiveness for investing in Indian stock markets will be less.
existing tax regime
As per the current regime, 10 per cent tax is levied on gains from investments in listed shares for a period of less than one year. Similarly, gains from investments in unlisted stocks for at least two years are taxed at 20 per cent. Non-resident Indians (NRIs) have to pay 10 percent tax on gains from investments in unlisted stocks. Gains from investments of more than 36 months in debt funds are taxed at the rate of 20 per cent.