Finance Minister Nirmala Sitharaman has made a big announcement in the Union Budget 2024 to rationalize and simplify capital gains. The new changes came into effect from today (July 23). However, there will be no impact on today's trading. The rate of short term capital gains (STCG) will be 20 percent. The rate of LTCG on some financial products will be 12.5 percent. Capital gains will be levied on unlisted bonds, debentures.

The Finance Minister announced in the budget speech that the STCG tax on certain financial assets has been increased to 20 percent. Currently it is 15 percent. 15 percent short term capital gains tax has been retained on other financial assets. Two major changes have been made regarding long term capital gains LTCG. First, the exemption limit of LTCG has been increased from Rs 1 lakh to Rs 1.25 lakh. The tax rate has been increased from 10 percent to 12.5 percent. This rule will apply to all financial and non-financial assets.

For listed financial assets, if the holding period is more than 12 months, it will come under LTCG. Whereas for unlisted and non-financial assets, the period of LTCG has been increased to 2 years. Capital gains on unlisted bonds, debentures, debt mutual funds and market linked debentures will be applicable as per the income tax slab of the investor.