Budget 2024: Tax rates on both short and long term capital gains raised with immediate effect

Finance Minister Nirmala Sitharaman increases capital gains tax rates, abolishes angel tax to boost Indian start-up ecosystem.

In what may come as somewhat of a dampener for stock market investors, Finance Minister Nirmala Sitharaman as part of her Budget speech on July 23 announced an increase in both long-term and short-term capital gains tax.

Ms. Sitharaman announced that short-term capital gains on "specified" financial assets will henceforth attract a tax rate of 20% instead of 15%. While all other financial assets and non-financial assets shall continue to attract the "applicable tax rate".

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Long-term gains on all financial and non-financial assets will attract a tax rate of 12.5% instead of 10%.

On the positive side, for the benefit of the lower and middle-income classes, it was proposed to increase the limit of exemption of capital gains on certain listed financial assets from ₹1 lakh to ₹1.25 lakh per year.

Listed financial assets held for more than a year is classified as long-term, while unlisted financial assets and all non-financial assets will have to be held for at least two years to be classified as long-term.

"Unlisted bonds and debentures, debt mutual funds and market-linked debentures, irrespective of the holding period, however, will attract tax on capital gains at applicable rates," Ms. Sitharaman said in her Budget speech.