Union Budget 2024 hikes Capital Gains Tax with Immediate Effect

In the Union Budget speech held on 23rd July, Finance Minister Nirmala Sitharaman announced an increase in both the long-term (LTCG) and short-term (STCG) capital gains taxes with immediate effect. By definition, a capital gain is any profit or gain resulting from the sale of a “capital asset.”

The FM also announced a big increase in the Securities Transaction Tax (STT) rate, going from 0.01 percent to 0.02 percent, among other announcements that had an effect on the markets. This hike will essentially result in index and equities traders who trade futures and options (F&O) paying twice as much in taxes. 

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Nirmala Sitharaman declared that the 15 percent tax rate on STCG on “specified” financial assets has been replaced with a 20 percent tax rate going forward. All other assets, whether financial and non-financial, will still be subject to the “applicable tax rate.”

On the other hand, the tax rate on long-term capital gains for all financial and non-financial assets has increased from 10 percent to 12.5 percent. Furthermore, the annual exemption ceiling of ₹1.25 lakh has been established for these gains.