Government can remove the complexities related to capital gains tax, opinion of tax experts
Capital Gain Tax: Last Friday, the market fell by more than 1000 points due to the news of equal tax on long-term and short-term capital gains received from the stock market. Later Finance Minister Nirmala Sitharaman had to say on Twitter that this was a complete rumour. However, tax experts are saying that many things are unclear and complex regarding capital gains tax.
The announcement of a uniform tax on both short-term and long-term capital gains from the stock market last Friday caused the market to drop by over 1,000 points. The Finance Ministry needs to provide the truth about this matter, as Finance Minister Nirmala Sitharaman had to later state on Twitter that this is all just a rumor.
Still, tax experts assert that there are a lot of ambiguous and complicated aspects of capital gains tax that should be simplified and made understandable for taxpayers. Following the formation of the new government, it is anticipated that these may change.
Tax experts say that capital gains tax is not imposed only on income from the stock market, capital gains tax is imposed on many things like mutual funds, the sale of property, transfer of shares of unlisted companies. There are complexities in the taxes related to these which taxpayers do not understand properly, hence the new government can make changes in it. Deductors are also facing problems regarding Tax Deducted at Source (TDS) and there may be changes in these also. A large number of TDS deductors are receiving notices.
Vivek Jalan, the partner of Tax Connect Advisory, said that the GST system was brought for better management of indirect tax, similarly to remove the complexities related to direct tax and its related capital gains tax, TDS, the new government has brought a new code of direct tax. Can. For example, he said that capital gains tax is levied even on the sale of property. There is ambiguity regarding its calculation.
Suppose an agreement was made to sell the property on March 31 and some advance was taken. If the property is registered in April or May, then there is no clear arrangement regarding which financial year will be the capital gain because the financial year of registration and registration has changed. Small investors also do not have clear information about the tax on income earned on investment in mutual funds.
Tax expert and Chartered Accountant (CA) Aseem Chawla says capital gains tax needs smooth reforms and should be made taxpayer-friendly. Many things like the valuation of share transfers of unlisted companies and the determination of tax thereon are still complex.
If you earn profit by selling shares within 12 months of buying them in the stock market, then it is called short-term capital gain and the government charges 15 percent tax on the profits. The profit on sale after one year is called long-term profit and is taxed at 10 percent.
