How will my gains from stocks and mutual funds be taxed after Budget 2024?

I sold some shares before the new tax rates were announced in the budget. Will those be taxed as per the new rates as well? Also, the revised ₹1.25L exemption on LTCG will be available to gains realised earlier this FY? Please provide a detailed clarification on the changed tax rates?

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Yes, various changes around taxation on capital gains were announced in this year’s budget. Here’s a thread where all the changes are listed.

For now, lets focus on taxation of shares and mutual funds.

See, shares and equity MFs were earlier taxed at 10% (LTCG) and 15% (STCG). The holding period considered here is 12 months i.e. shares sold before 1 year are considered short-term and those sold after will be long-term. Moreover, a ₹1 lakh exemption was allowed on LTCG.

Now, the Budget 2024 was announced on 23rd July 2024, and this is what changed for shares and equity MF taxation:

  • Tax on STCG was revised to 20%

  • Tax on LTCG was amended to 12.5%

  • LTCG exemption was increased to ₹1.25L

  • The holding period remains unchanged, which is 12 months.

However, it was also clarified that these changed rates will be applicable for gains realised 23rd July 2024 onwards. If you have sold shares or redeemed mutual fund units between 1st April 2024 and 23rd July 2024, the gains will still be taxed as per the old rates.

As far as the LTCG exemption is concerned, there’ll be no tax liability up to ₹1.25 lakhs from FY 2024-25 onwards. However, LTCG exceeding ₹1.25 lakhs will be subject to 10% tax for gains realised before 23rd July 2024 while those realised after that will attract tax rate of 12.5%.

For other asset classes, here’s a table with revised rates and holding period.

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Shares sold before the new tax rates were announced will generally be taxed according to the rates in effect at the time of the sale. The revised ₹1.25 lakh exemption on Long-Term Capital Gains (LTCG) will apply to gains realized during the financial year in which it was announced. Therefore, gains realized earlier in the same financial year will benefit from the updated exemption limit. For precise guidance on how these changes impact your specific situation, consult a tax advisor.

I have few questions . Suppose I have some short term capital gains on some particular stock . Now here there are two questions that I have .

1 Even after paying STCG tax do I need to pay the tax for income earned from shares in Income tax also which we file year end ?

2 suppose Im eligible above 10lakhs salary slab . So can I transfer these shares to my father who is now retired . So in that case since he is retired the income slab in which it will come is the profit / gains amount gained from selling shares that were transferred to him , instaed of me selling those shares as a salaried employee ?

Hey @Chirayu ,

  1. The income tax that you pay during the year is considered as your advance tax. (For short term gains you will pay advance tax based on STCG rates)

Now, when the financial year ends, you are suppose to file your ITR which will be an account of your annual income and accordingly you will be able to determine your tax liability. You can claim the credit of TDS and advance taxes against this liability, pay the balance liability or claim a refund.

  1. If you wish to gift the shares to your father, the income from sale of these shares can either be treated as capital gains or income from business & profession in your father’s ITR. We will be posting a detailed thread on this soon. Stay updated :v:
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After Budget 2024, gains from stocks and mutual funds will be subject to capital gains tax, which varies based on the holding period. Short-term gains (held for less than a year) are taxed at 15%, while long-term gains exceeding ₹1 lakh will incur a 10% tax. Stay informed about potential changes in tax regulations, as they can impact your investment strategy and overall returns. Always consult a tax advisor for personalized guidance!