The Ministry of Finance wants to carry out a comprehensive review of the capital gains tax regime and is ready to change it when given the opportunity, Revenue Secretary Tarun Bajaj said on Wednesday.
Speaking in an interactive session with CII, Bajaj said “we really need to rework the capital gains structure on everything including rates and holding periods.”
Bajaj has requested the Confederation of Indian Industry (CII) to undertake in the next three to four months a comprehensive study of the capital gains tax regime in developed and developing countries in terms of rates and holding periods and submit a report to the revenue department. He pointed out that the CII study can supplement the huge amount of information that is already with the revenue department on the capital gains front.
Bajaj noted that the capital gains tax regime in India has become “too complicated” as different rates and different holding periods have been set for different sectors, asset classes and instruments like real estate. , shares and InvIT. “For real estate we did 24 months, for equities we did 12 months and InVIT it’s 36 months,” he noted.
Capital gains bonus
Bajaj pointed out that the government expects to get a “good amount” of capital gains tax revenue this fiscal year thanks to the strong rise in stock markets.
“Despite the fact that capital gains tax rates are much lower at 10% and 15% in the stock market in the short and long term, we expect to earn an estimated amount of between 60,000 and ₹80,000 crore via capital gains this financial year.Last year it was around ₹6,000-₹8,000 crore.
This has made a huge difference in the budget projections on tax revenue this fiscal year. Now, with the US Fed scaling back, it’s unclear how the markets will play out in the next few days or the next fiscal year,” he said.
If business fundamentals are good, then markets should do well, as will the collection of capital gains tax next year as well, he added.
GST rates on health insurance
Regarding ICN President-Elect Sanjiv Bajaj’s suggestion that the 18% GST on health insurance was higher and needed to be reviewed, Bajaj urged ICN to make this representation before the Bommai Committee, which is reviewing the structures of GST rates and should submit its report within a month.
The Revenue Secretary also said care must be taken that India does not follow the situation in the United States where inflation and high insurance premiums have led to rising health care costs.
February 09, 2022