The Indian Government passed the Union Budget of 2018 with some changes in the fiscal policies. Since the country is in the post-demonetization recovery phase, the majority of the changes were done in the taxation policies. One such reformation includes the revision of the Long Term Capital Gains tax. Not paying much or the heed to the new tax policy can land you in trouble. Hence, it is essential that you understand the change and take the necessary steps to avoid losing your money.
What is Long-Term Capital Gains (LTCG) Tax?
To understand the change, we first need to understand the concept of this taxation policy. The profit gained from the sale or transfer of an asset is considered as capital, which includes the bonds, real estate, equities, etc. Moreover, these gains are bifurcated into two parts that are short term gains and long term gains. Capital which you can gains from assets owned for more than 36 months are considered as long term gains, and gains realized from assets held less than 36 months are short term gains.
According to the budget of 2018, the long term capital gains will be taxed at 10% for the amount over INR 1 lakhs and short term capital gains at 15% for the same amount, while capital gains below INR 1 lakh are tax-free. Capital gains from the sale of an asset after the 31st of March 2018 will be taxable under the new LTCG Tax Regime.
Long Term Capital Gains Tax can impact your gained income heavily from the sale or transfer of stocks in the market. The capital amount taxed on the gains could affect your investment power or expected returns from the investment. Moreover, the Indian Government has mentioned specific exemptions for sectors that deal in the buying and selling of virtual or physical assets, which means that there are ways that can be used to save your money.
The best way to deal with the Long Term Capital Gains Tax is if you hold on to your assets for some time, till they cross the long term period. Apart from that investing in government schemes can be your last resort.