Budget 2023: In the upcoming Union Budget for 2023–2024, the government may consider rationalising the long-term capital gains (LTCG) tax system. Currently, shares held for longer than a year are subject to LTCG tax of 10%. This tax was stopped in 2005, but it was reinstated in the Union Budget for the next fiscal year in 2018.

According to individuals knowledgeable of the situation, the Finance Ministry is reportedly considering rationalising the LTCG tax structure and perhaps changing the base year for calculating inflation-adjusted capital gains in order to ensure parity between similar asset classes.

Gains from the sale of real estate and unlisted shares that have been held for longer than two years are subject to a 20% LTCG tax. In the upcoming budget, the government may consider rationalising tax rates as well as the holding period for calculating LTCG, according to sources.

Moreover, a change in base year for computing inflation-adjusted capital gains is being contemplated. The index year for capital gains tax calculation is revised periodically to make it more relevant. The last revision took place in 2017 when the base year was updated to 2001.

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