3.4 Lakh escape the tax on capital gains, MF sales

3.4 Lakh escape the tax on capital gains, MF sales

More than 3.4 lakh holders trading in classified equity shares and mutual funds are accused of evading or not disclosing long-term capital gains tax, an estimate by the income tax department revealed, leading officials to ignore demands for elimination of the levy introduced two years ago.

Data analysis on the impact of LTCG showed that in 2018-19, around 91,000 individuals and Hindu Undivided Families (HUFs), or 16 percent, did not file returns on listed shares and mutual funds that sold listed shares or mutual funds exceeding Rs 20 lakh. The selling value of these shares and units of the mutual fund was valued at 99,000 crore rs.

About 2.5 lakh individuals and HUFs, or 44 percent of the population who sold shares or MF units, reported either zero or significantly reduced interest in their income tax returns although the sales added up to more than Rs 4 lakh crore. The government has yet to decide the course of action to be taken against these bodies. This may explain why there is a desire for the elimination of LTCG and Securities Transaction Tax (STT) so that people’s earnings from shares etc. are not included in their taxes … When LTCG is eliminated, it will open up a major backdoor for tax avoidance, “an officer stated.

Government sources have said the tax also helps trace shareholders who would otherwise have gone unnoticed if they don’t pay income tax. Many of the penny stock transactions or those involving black money can be traced along this path, officials argued

“For decades, it has been a normal tax globally of approximately 95 percent, including the United States, Canada, Australia, China and several European countries levying it,” said the official, while pointing out the tax varies from 10 percent to 35 percent on profits from the sale of shares or mutual fund units.

The sources said demands for removal of a levy imposed two years ago were not in line with tax policy recommendations for stability and continuity.

Starting in April 2018, the selling of shares and equity-oriented mutual funds, held for one year or more, began to receive 10 percent LTCG (plus cessation) if a year’s benefit reached Rs 1 lakh.

Latest Updates

  • GST Audit Limit Guide for Taxpayers with Turnover Above 2 Crores
    GST Audit Limit Guide for Taxpayers with Turnover Above 2 Crores The due date for filing GSTR-9 and GSTR-9C forms is December 31. The Finance Act, 2021 brought significant changes to GST audit requirements, particularly impacting businesses with higher turnovers. While previously, taxpayers with an annual turnover of Rs. 2 crores […]
  • New Form 12BAA Issued by CBDT to Report Non-Salary Taxes Paid by Employees
    New Form 12BAA Issued by CBDT to Report Non-Salary Taxes Paid by Employees The Union Budget 2024 brought a notable shift for salaried employees with the introduction of Form 12BAA, a new tax form issued by the Central Board of Direct Taxes (CBDT). Form 12BAA is designed to enable employees to […]
  • Tax Compliance for NRIs Under the Income Tax Act, 1961: A Guide
    Tax Compliance for NRIs Under the Income Tax Act, 1961: A Guide Non-Resident Indians (NRIs) are defined under the Foreign Exchange Management Act (FEMA) as Indian citizens residing abroad for employment, business, or other reasons, with the intention of an indefinite stay. For tax purposes under the Income Tax Act, 1961, […]
  • Unlock Tax Savings: A Guide for NRIs on Lower or NIL TDS Certificates for Property Sales in India
    A Comprehensive Guide for NRIs on Lower or NIL TDS Certificates for Property Sales in India For Non-Resident Indians (NRIs) planning to sell immovable property in India, understanding the tax landscape, particularly Tax Deducted at Source (TDS), is crucial. Many NRIs face hefty tax deductions that can strain cash flow, but […]
  • Understanding the New Income Tax Regime’s Impact on Salaried Employees
    Understanding the New Income Tax Regime’s Impact on Salaried Employees The new income tax regime promises lower tax rates, a benefit that appeals especially to high-income earners looking to reduce their tax obligations. However, this benefit comes with a trade-off: reduced access to many traditional exemptions and deductions. Although taxpayers can […]