Income Tax written in this representative image
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Union Finance Minister Nirmala Sitharaman introduced the Income Tax Bill, 2025, in the Lok Sabha on Thursday and urged Speaker Om Birla to refer it to a select committee of the House.
Opposition members opposed the Bill at the introduction stage but the House passed a motion by voice vote for its introduction.
Getting to the finer points of the new tax bill, will there be changes in the short-term capital gains (STCG) and long-term capital gains (LTCG)? Let's take a look:
To take matters into perspective, the government had in Budget 2024, changed the capital gains tax regime in July and reports suggest that there are no changes in the capital gains tax regime in the new Income Tax Bill, 2025.
The taxation will remain the same as the current one.
The government had introduced a simplified capital gains tax regime in 2024 and capital assets taxed under the capital gains regime are divided into two categories -
1. Listed securities
2. Unlisted securities and non-financial securities.
The holding period to define capital gains as short-term or long-term is different for both categories of capital assets.
What FM said in Budget 2024
1. The Finance Minister (FM) in the Union Budget 2024 has announced that both the LTCG and STCG liability of equity mutual fund investors is subject to an increase of 12.5% and 20%, respectively, effective 23 July 2024.
2. The FM also stated that the LTCG liability increase to 12.5% is not just for equity mutual fund investments; it applies to any long-term gains from investments in financial and non-financial assets.
3. The budget also mentioned that the STCG liability of investors is increased to 20% for specific financial asset investments like equity mutual funds. Apart from the specific financial asset investments listed in the budget, the STCG increase will not affect other investments in financial or non-financial asset classes.
What was it before
Pre-2024 Tax Structure for Mutual Funds Before the 2024 Union Budget, equity mutual fund schemes were taxed at 15% and 10% STCG and LTCG respectively.
The simplified Income Tax Bill, which is half the size of the 1961 Income Tax Act, seeks to achieve tax certainty by minimising the scope of litigation and fresh interpretation, the Income Tax department said on Thursday.
The new bill, introduced in the Lok Sabha, has a word count of 2.6 lakh, lower than 5.12 lakh in the I-T Act. The number of sections is 536, as against 819 effective sections in the existing law.