Will the long-term capital gains exemption cap increase in the budget for 2023?

 

 

According to economists, the exemption for long-term capital gains on equity investments needs to be strengthened in order to take inflation and rising income levels into consideration as well as to attract more investors to the equity markets.

 

Every Union budget normally causes investors a great deal of anxiety. The outlook for the budget for 2023–24 is being closely watched this time around, and investors are hoping that Finance Minister Nirmala Sitharaman will deal them a nice hand. Here are a few of the criteria:

 

 

Justification for the protective duration requirement

 

Most traders find it tough to get a clear picture of threshold limits for identifying if an asset is labelled as long-term or temporary to determine the tax liability. That’s due to the fact that the duration for determining if an asset is long-term varies from one asset category to another. Abhishek Soni, co-founder and CEO of Tax2win.in, believes that the finances should be simplified."At present, all capital property has specific conservation durations and specific tax rates, which can be simplified," he said.

 

While debt money must be held for a minimum of three years to be considered a long-term capital asset for which a concessional tax charge on booked profits can be obtained, fairness cash must be held for one year, and real estate and unlisted shares must be held for two years.

 

Balwant Jain, a Mumbai-based chartered accountant, said, "Bonds are a temporary asset type, and fairness is a long-term asset class. "The holding period requirement for time period and funding as a long-term capital asset for taxation purposes should be such that long-term investments in equity are encouraged." He proposed that devices of debt funds, if held for 12 months before sale, must be viewed as long-term capital assets. He suggested that it should be three years for equity mutual funds and five years for real estate.