Changes in Capital Gains Taxation: Budget 2024 Amendments

Capital gains taxation had grown complex with multiple holding periods, indexation rules and divergent rates across asset classes. The 2024 Budget sought simplification — to reduce litigation, ease compliance, and create a uniform framework that applies across equities, debt, real estate and other assets.

The amendments introduce standard holding periods: 12 months for listed securities (equity shares, listed bonds, listed mutual funds) and 24 months for all other capital assets, including real estate and unlisted securities. This uniformity simplifies classification of STCG vs LTCG and aligns planning across asset types.

Long-term capital gains are now generally taxed at a uniform rate of 12.5% across most asset classes, and indexation benefits have been removed effective July 23, 2024. Equity-related LTCG rates moved from 10% to 12.5% while STCG on listed equity/equity funds increased to 20% (from 15%). The exemption threshold for equity LTCG was raised from ₹1 lakh to ₹1.25 lakh.

Removal of indexation increases tax burden for long-held assets; transitional rules apply for assets acquired before July 23, 2024. Transfers by non-individuals (gifts, trusts) are more likely to attract tax under the widened definition of "transfer." Foreign investors and NRIs must reassess withholding implications. IT systems and reporting flows require updates to reflect the new computation and rate rules.

The 2024 capital gains reforms prioritise simplicity and administrative efficiency over inflation-adjusted fairness. While they reduce disputes and harmonise treatment, taxpayers with long-held, inflation-affected assets may face higher liabilities. Strategic tax planning, careful documentation, and system upgrades will be essential for compliance under the new regime.