CBDT says no inflation adjustment available for LTCG tax: Things to know

The Finance Bill, 2018, has proposed to provide for a new long-term capital gains tax regime for equity shares, unit of an equity-oriented fund, and unit of a business trust

Proportion of return filers at lower levels of income declining

Amid adverse reactions coming from stock markets to the proposed long-term capital gains tax on securities, the income-tax department on Sunday clarified that price indexation (adjustment to inflation) will not be available for this tax. The tax comes into effect from April 1, 2018, the clarifications said. | Today’s Paper

Here are the other responses to the frequently asked questions around long-term capital gains tax:
What has been proposed, according to the I-T dept clarifications?
Under the existing regime, long-term capital gains arising from the transfer of long-term capital assets, being equity shares of a company or a unit of the equity-oriented fund or a unit of a business trust, is exempt from income-tax under clause (38) of section 10 of the Act. However, transactions in such long-term capital assets are liable to securities transaction tax (STT).
Consequently, this regime is inherently biased against manufacturing and has encouraged diversion of investment to financial assets. It has also led to significant erosion in the tax base resulting in revenue loss.
The problem has been further compounded by the abusive use of tax arbitrage opportunities created by these exemptions.
In order to minimise economic distortions and curb erosion of tax base, it is proposed to withdraw the exemption under clause (38) of section 10 and to introduce a new section 112A in the Income-tax Act, 1961 vide clause 31 of the Finance Bill, 2018, so as to provide that long-term capital gains arising from transfer of such long-term capital asset exceeding Rs 100,000 will be taxed at a concessional rate of 10 per cent.
What is the meaning of long-term capital gains under the new tax regime?
Long-term capital gains mean gains arising from the transfer of long-term capital asset.

The Finance Bill, 2018 proposes to provide for a new long-term capital gains tax regime for the following assets:
i. Equity Shares in a company listed on a recognised stock exchange;
ii. Unit of an equity oriented fund; and
iii. Unit of a business trust.
The proposed regime applies to the above assets, if –
a. the assets are held for a minimum period of twelve months from the date of acquisition; and
b. the Securities Transaction Tax (STT) is paid at the time of transfer. However, in the case of equity shares acquired after 1.10.2004, STT is required to be paid even at the time of acquisition (subject to notified exemptions). | Readmore…

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Budget 2018 LIVE: Industry reacts on LTCG tax, no change in income tax

Finance Minister Arun Jaitley delivered Union Budget 2018-19 speech. Get live updates on Budget 2018

Budget 2018 LIVE: Modi says it's aam aadmi, business-friendly Union Budget

Budget 2018 LIVE updates: Budget 2018 LIVE updates: Finance Minister Arun Jaitley presented the Budget for the financial year 2018-’19 in Parliament on Thursday. With an eye on the next Lok Sabha elections, Jaitley in his 2018-19 budget on Thursday proposed a major health insurance scheme for the poor, a higher minimum support price and a step up of Rs 1 lakh crore as institutional credit for farmers along with a spend of nearly Rs 6 lakh crore on infrastructure development.

To pay for this seeming bout of generosity, albeit with votebanks in mind, the finance minister has mopped up huge sums through three or four simple steps, mostly aimed at the middle class. While providing some sops to salaried individuals and pensioners, it has aimed to raise Rs 11,000 crore by increasing cess on income of individuals, from three to four per cent. Additionally, it has aimed to raise money by imposing a 10 per cent Social Welfare Surcharge on all imported goods.
Here are some reactions on Budget 2018 from industry-experts

Technology

Arvind Bali, CEO, Videocon Wallcam

The budget has a clear push towards socio-economic growth of the country with aggressive focus on agriculture, education, rural economy, healthcare and infrastructure. The allocations aimed towards rural India will increase consumption which boost industries and help in nation building. Focus on digital solution and new age technologies is a big push in terms of creating the right environment for the next level of development in India. The increase in customs duty will further boost ‘Make in India’.

Real Estate

Group Satellite

“Disappointing budget from the perspective of private sector involvement in creating mass housing stock that will make homeownership a reality for all Indians. Budget has unfortunately ignored the stressed and vilified real estate sector that is in desperate need of Government support through specific targeted tax breaks that help make building affordable homes in India viable.” – Sarjan Shah, MD, Group Satellite.

Pacific India Group

“The budget this year is a boost to ‘Make in India’ initiatives and aimed at a progressive development of the rural economy and growth of the entire country. The focus on infrastructure, social inclusion and progress, education, agriculture and healthcare are steps in the right direction. Though there is not much in terms of addressing the problems faced by the realty sector but the move towards no adjustment in case of the circle rate not exceeding 5 % of sale consideration is a welcome move. Standard deduction for transport, medical reimbursement for salaried taxpayers and incentives for Senior citizens will help increase disposable income at hand.” -Abhishek Bansal, Executive Director of Pacific India Group.

Click here to read → Budget 2018 highlights