Page 17 - Seniorstoday Aug 2024 Issue
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simplifying taxes,  there are as many as 99          The other set of changes is in relation to
         clauses to amend the Income Tax Act and            the tax rates and the method of calculation.
         some of these are retrospective.                   The position for listed shares and securities
          In 2023 there were 122 clauses in the             has not changed.  The period of holding
         Finance Bill relating to the Income Tax Act.       to make it a Long Term Capital Asset
          Surely the Income Tax Act must hold the           would still be 12 months.  Accordingly,
         world record for the maximum number of             such an asset held for up to 12 months will
         clauses that have been made since it was           be treated as a Short Term Capital Asset
         promulgated in 1961!                               and the gain will be taxed as a Short Term
          One major set of changes relates to               Capital Gain.
         capital gains. In fact, after the Budget            If the period of holding is more than 12
         was announced on 23rd July, 2024 there             months, then it will be a Long Term Capital
         were protests from taxpayers all over the          Gain.
         country, and the Govt.  then was forced to          For most other assets, such as unlisted
         roll back and modify some of the proposed          shares, Immovable Property, Gold, Silver,
         amendments.  The amended Finance Bill              goodwill etc. the relevant period of holding
         was then introduced in Parliament.  The            now is 24 months.  So if such an asset is
         new position is set out hereunder.                 held for less than 24 months, it will be
          Upto now a long term capital gain on the          treated as a Short Term Capital Asset. If it
         sale of many  capital assets (other than           is held for more than 24 months, it will be
         listed shares and Units) was determined by         treated as a Long Term Capital Asset.
         deducting the “indexed cost” from the net           There is a 3rd category and that is
         selling price.                                     “Specified Funds” and certain Bonds and
           The Government treated Financial Year            Debentures.  If these were acquired up to
         2001-02 as the base year having an index           22.7.2024, then if they are held for more
         of 100 and every year the index for that           than 3 years, the gain would be treated as a
         year would be announced.  In fact for FY           Long Term Capital Gain.
         2024-25, the year going on, the index has           In the event that they are acquired on or
         already been announced at 3.63 times the           after 23rd July 2024, then no matter what
         value as of 1.4.2001.                              the period of holding, the rate of tax would
           So, if a person bought a property or gold        be the normal rate of tax applicable to
         or silver or unlisted shares etc. before           regular income, such as property income
         1.4.2001, then the first aspect was to step        etc. which can go up to 30% + surcharge +
         up the original cost to the value as on            cess.
         1.4.2001.                                           The second set of changes relates to the
           Let us assume that the value of a flat as        manner of calculation of  tax and the tax
         on 1.4.2001 was Rs.1 crore.  The index             rates.
         for FY 2024-25 is 3.63 times that figure.            Indexation was to be taken away but now
         Accordingly the indexed cost would be              the position is that, for individuals and
         Rs.3,63,00,000/-.                                  HUF (but not for firms and companies
           One set of changes is in relation to the         etc.) the Indexation will be available
         period of holding required for an asset to be      for Immovable property acquired up to
         treated as a Long Term Capital Asset.              22.7.2024.  In such a case, the Capital Gains


        SENIORS TODAY | ISSUE #62 | AUGUST 2024                                                             17
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