The government has hinted that it may undertake drastic changes in the capital gains structure in the next budget to boost revenue collections and spending on welfare schemes.
During the post-budget industry discussion, Tarun Bajaj, Revenue Secretary has earlier said on 9 February that the capital gains tax structures have become too complicated and need to be revised. Later, on 28 February, Bajaj had said that 80 per cent of the long-term capital gains from equities FY20 was made by people with income of Rs 50 lakh or more.
The proposal which is being studied in the finance ministry, the center’s philosophy behind it is that the passive income drawn from the capital market should not be taxed at a lower rate as compared to income earned from running a business, which involves entrepreneurial risks and job creation.
The government has calculated that long-term capital gains are taxed in many counties ranging from 25 per cent to 30 percent or at the applicable income tax rates.
