Finance Ministry may review tax regime on long-term capital gains

Gains from transactions in shares held for less than 12 months are short-term capital gains

The finance ministry reviewing the long-term capital gains (LTCG) taxation regime ahead of the Union Budget 2017-18, in the backdrop of Prime Minister Narendra Modi’s suggestion of increasing contribution of financial market participants to the exchequer.

Sources said the review may lead to tweaking in the holding period for gains in stocks to qualify as long-term capital gains, even as the government may leave the tax rates unchanged. Currently, if an investor is holding a stock for more than 12 months, it is considered to be a long-term investment. Any long-term gains from transaction in such stocks are exempt from taxes.

Gains from transactions in shares held for less than 12 months are considered short-term capital gains and are subject to 15 per cent tax.

“Based on feedback from the market participants, there is a view in the government that a rejig in the holding period would be more palatable to global and domestic investors than imposition of capital gains tax,” said a government source, as reported by Indian Express.