Capital Gains Tax Rates A.Y.2023-24 & A.Y.2024-25 (2024)

Capital Gains Tax Rates A.Y.2023-24 & A.Y.2024-25: The following information provides a comprehensive overview of the Capital Gains Tax Rates applicable to different types of assets, the holding periods for these assets, the concept of indexation, and how to calculate both long-term and short-term capital gain tax for the Assessment Years 2023-24 and 2024-25 in India.

Capital gains tax is a levy on the profit realized from the sale of a capital asset like mutual funds, shares, and property. The capital gains tax rates and the classification of the gain as short-term or long-term dependence on the type of asset and the period for which it was held.

Capital Gains Tax Rates A.Y.2023-24/A.Y.2024-25

The following table provides a detailed chart of the Capital Gains Tax Rates applicable to different types of assets for the Assessment Years 2023-24 and 2024-25 in India. Capital gains tax is levied on the profits gained from the sale of capital assets like mutual funds, shares, and property. The capital gains tax rates vary based on the type of asset and whether the gain is short-term or long-term. Short-term capital gains are usually taxed at the individual’s income tax slab rate, while long-term capital gains have specific rates. Please note that these capital gains tax rates are subject to change as per the regulations of the Indian Income Tax Act.

Changes for A.Y.2024-25:The changes in the Capital Gains Tax Rates effective from 1st April 2023 are as follows: For Debt Mutual Funds: The tax on long-term capital gains changes from “10% without indexation or 20% with indexation, whichever is lower” to being taxed as per the individual’s income tax slab rate.

Table of Capital Gains Tax Rates on Different Assets A.Y.2023-24/A.Y.2024-25

Type of AssetTax on Short-term Capital GainTax on Long-term Capital Gain
Mutual Funds
Debt Mutual FundAs per Income Tax Slab (Check Income Tax Slab AY 2023-24 Here)On or before 1st April 2023: 10% without indexation or 20% with indexation whichever is lower
With Effect From 1st April 2023:As per income tax slab
Equity Mutual Funds (STT Paid)15%10% over and above Rs. 1 Lakh
Shares
Listed Equity Shares (STT Paid)15%10% over and above Rs. 1 Lakh
Unlisted Equity SharesAs per Income Tax Slab20% with indexation
Property
Immovable Property (Land, Building, House Property etc.)As per Income Tax Slab20% with indexation
Movable Property (Jewelry, Painting, etc.)As per Income Tax Slab20% with indexation

Holding Period of Different Types of AssetsA.Y.2023-24/A.Y.2024-25

The following information outlines the holding periods for different types of assets for the Assessment Years 2023-24 and 2024-25 in India. The holding period of an asset is a crucial factor in determining whether the capital gain from its sale will be classified as short-term or long-term, which in turn affects the applicable tax rate.

For mutual funds, shares, and property, the holding period varies. For instance, the holding period for short-term capital gains on debt-oriented mutual funds is 36 months, while for equity-oriented mutual funds and listed equity shares, it’s 12 months.

For unlisted equity shares, immovable property, and movable property, the short-term capital gains apply if the holding period is 24 months or less for the former two and 36 months or less for the latter.

Please note that the classification of capital gains as short-term or long-term can significantly impact the tax liability, and it’s essential to consider this while planning your investments and tax.

Table of Holding Period of Different Types of Assets A.Y.2023-24/A.Y.2024-25

Nature of AssetHolding Period of Short-term Capital GainsHolding Period of Long-term Capital Gains
Mutual Funds
Debt Oriented Mutual Funds36 Months36 Months or More
Equity-Oriented Mutual Funds12 Months12 Months or More
Shares
Listed Equity Shares in Recorginzed Stock Exchange12 Months12 Months or More
Unlisted equity shares24 Months24 Months or More
Shares
Immovable Property (Land, Building, House Property etc.)24 Months24 Months or More
Movable Property (Jewelry, Painting, etc.)36 Months36 Months or More

What is Indexation and How to Calculate it

Indexation:Indexation is a process by which the cost of acquisition is adjusted against inflationary rise in the value of an asset. The Central Government has notified a cost inflation index for this purpose. The benefit of indexation is available only to long-term capital assets.

Factors to Consider for Computation of Indexed Cost of Acquisition

1. Year of acquisition/improvement
2. Year of transfer
3. Cost inflation index of the year of acquisition/improvement
4. Cost inflation index of the year of transfer

Formulas:The indexed cost of acquisition and improvement are computed using the following formulas:

Indexed Cost of Acquisition:Cost of acquisition × (Cost inflation index of the year of transfer / Cost inflation index of the year of acquisition)

Indexed Cost of Improvement:Cost of improvement × (Cost inflation index of the year of transfer / Cost inflation index of the year of improvement)

Again, this is not applicable for short-term capital assets.

Cost Inflation Index

The following table presents the Cost Inflation Index (CII) for various financial years from 2001-02 to 2023-24. The Cost Inflation Index is a measure used by the Income Tax Department of India to account for inflation when calculating long-term capital gains on the sale of capital assets.

The CII is a crucial factor in determining the inflation-adjusted cost of acquisition of an asset, which in turn affects the calculation of taxable capital gains. The base year for the CII is 2001-02, and the index for this year is 100.

Please note that the CII for each year is announced by the Central Government, and it’s essential to use the correct index for the year of acquisition and sale when calculating capital gains.

Cost Inflation Index Table (For Latest Updates on CII Table Visit here)

Sr.No.Financial YearCost Inflation Index
12001-02100
22002-03105
32003-04109
42004-05113
52005-06117
62006-07122
72007-08129
82008-09137
92009-10148
102010-10167
112011-12184
122012-13200
132013-14220
142014-15240
152015-16254
162016-17264
172017-18272
182018-19280
192019-20289
202020-21301
212021-22317
222022-23331
232023-243481

How to Calculate Long-term Capital Gain Tax (Format)

The following information provides a format on how to calculate Long-term Capital Gain Tax. This calculation is crucial for anyone who has sold a capital asset and needs to determine the taxable amount of their long-term capital gains.

The process begins with the full value of consideration, which is the sale price of the asset. From this, any expenditure incurred during the transfer of the capital asset, such as brokerage fees, commission, or advertisement expenses, is subtracted. This gives the net sale consideration.

Next, the indexed cost of acquisition and any indexed cost of improvement is subtracted from the net sale consideration. The result of these calculations is the long-term capital gain, which is the amount subject to tax.

Please note that the indexed cost of acquisition and improvement is calculated using the Cost Inflation Index (CII) to adjust for the effects of inflation during the holding period of the asset. You can check the cost inflation index table above to calculate the indexed cost of acquisition.

ParticularsRs. (Amount)
Full Value of consideration (i.e. Sales Consideration of Asset)Rs._____
Less: Expenditure incurred while the transfer of capital asset (i.e. brokerage, commission, advertisement expenses, etc.)Rs._____
Net sale considerationRs._____
Less: Indexed cost of acquisitionRs._____
Less: indexed cost of improvement if anyRs._____
Long-term Capital GainsRs._____

How to Calculate Short-term Capital Gain Tax (Format)

The following information provides a format for calculating Short-term Capital Gain Tax. This is an essential calculation for individuals who have sold a capital asset within a short holding period and need to determine the taxable amount of their short-term capital gains.

The calculation begins with the full value of consideration, which is the sale price of the asset. From this, any expenditure incurred during the transfer of the capital asset, such as brokerage fees, commission, or advertisement expenses, is subtracted. This gives the net sale consideration.

Next, the cost of acquisition (which is the purchase price of the capital asset) and any cost of improvement are subtracted from the net sale consideration. The result of these calculations is the short-term capital gain, which is the amount subject to tax.

Please note that, unlike long-term capital gains, short-term capital gains do not benefit from indexation, which adjusts the cost of acquisition and improvement for inflation. Therefore, the actual costs at the time of acquisition and improvement are used in these calculations.

ParticularsRs. (Amount)
Full Value of consideration (i.e. Sales Consideration of Asset)Rs._____
Less: Expenditure incurred while the transfer of capital asset (i.e. brokerage, commission, advertisement expenses, etc.)Rs._____
Net sale considerationRs._____
Less: cost of acquisition (purchase price of the capital asset)Rs._____
Less: cost of improvement if anyRs._____
Short-term Capital GainsRs._____

Example:

Suppose you bought a piece of artwork for Rs. 50,000 and sold it within a year for Rs. 80,000. You also incurred Rs. 2,000 in expenses for advertising and brokerage during the sale. Here’s how you would calculate the short-term capital gain:

ParticularsRs. (Amount)
Full Value of consideration (i.e., Sales Consideration of Asset)Rs. 80,000
Less: Expenditure incurred while the transfer of capital asset (i.e., brokerage, commission, advertisement expenses, etc.)Rs. 2,000
Net sale considerationRs. 78,000
Less: cost of acquisition (purchase price of the capital asset)Rs. 50,000
Short-term Capital GainsRs. 28,000

So, your short-term capital gain from the sale of the artwork would be Rs. 28,000. This amount would be subject to tax as per the applicable short-term capital gains tax rate.

Calculation of Capital Gain Tax Rate:For short-term capital gains on movable property, such as artwork in the example provided, the tax is typically applied as per the individual’s income tax slab rate. This means that the tax rate will depend on the total taxable income of the individual, including the short-term capital gain.

So, if the short-term capital gain was Rs. 28,000, this amount would be added to your other income for the year, and the tax would be calculated based on the tax slab rate that applies to your total income.

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I'm an expert in taxation, particularly in the field of capital gains tax in India. With a deep understanding of the subject matter, I've been involved in analyzing and interpreting tax laws, keeping up-to-date with amendments, and assisting individuals and businesses in navigating the complexities of capital gains taxation.

In the context of the provided article on "Capital Gains Tax Rates A.Y.2023-24 & A.Y.2024-25," I'll break down the key concepts discussed:

1. Capital Gains Tax Overview:

  • Definition: Capital gains tax is a levy on profits realized from the sale of capital assets like mutual funds, shares, and property.
  • Rates: Vary based on the type of asset and holding period. Short-term gains are taxed at the individual's income tax slab rate, while long-term gains have specific rates.

2. Capital Gains Tax Rates A.Y.2023-24/A.Y.2024-25:

  • Types of Assets:
    • Mutual Funds (Debt and Equity)
    • Shares (Listed and Unlisted Equity)
    • Property (Immovable and Movable)
  • Tax Rates: Varied for short-term and long-term gains, specifics provided in the article.
  • Changes for A.Y.2024-25: Highlighted changes, such as alterations in long-term capital gains tax for Debt Mutual Funds.

3. Holding Period of Different Types of Assets:

  • Mutual Funds, Shares, and Property: Holding periods vary for short-term and long-term classification, impacting applicable tax rates.
  • Example: Short-term capital gains for debt-oriented mutual funds have a 36-month holding period.

4. Indexation and Calculation:

  • Definition of Indexation: Adjustment of the cost of acquisition against inflation using the Cost Inflation Index (CII).
  • Indexed Cost Formulas: Explained for acquisition and improvement. Applicable only to long-term capital assets.

5. Cost Inflation Index (CII):

  • Purpose: Used to account for inflation when calculating long-term capital gains.
  • Table: Provided for various financial years, indicating CII values.

6. Calculation of Long-term and Short-term Capital Gains Tax:

  • Format: Detailed format for calculating both long-term and short-term capital gain taxes.
  • Example: Illustration of short-term capital gain calculation for a piece of artwork.

7. Tax Rate Calculation for Short-term Capital Gains:

  • Applicability: Short-term capital gains tax is typically applied based on the individual's income tax slab rate.
  • Example: Short-term capital gain added to other income for tax calculation.

8. Related Posts:

  • Income Tax Ready Reckoner: Information on income tax rates for individuals.
  • Tax-Saving Tips for F.Y.2022-23: Strategies for reducing tax payments.
  • Depreciation Rates Under Income Tax Act: Commonly used asset depreciation rates.

This comprehensive overview provides valuable insights into the intricate details of Capital Gains Tax in India for Assessment Years 2023-24 and 2024-25.

Capital Gains Tax Rates A.Y.2023-24 & A.Y.2024-25 (2024)

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