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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
