Capital gain Taxation.

 Period of Holding / Classification of capital Asset:

	Short Term Capital Asset	Long term Capital Asset
General Criteria	An asset held for a period of 36 months or less is a short-term capital asset.	An asset held for a period of 36 months or less is a short-term capital asset.
Immovable Property : Land, Building and House property, Unlisted shares of a company	An asset held for a period of 24 months or less is a short-term capital asset.	An asset held for a period of 24 months or more is a short-term capital asset.
Listed Equity or preference shares	An asset held for a period of 12 months or less is a short-term capital asset.	An asset held for a period of 12 months or more is a short-term capital asset.
Listed Securities (like debentures, bonds, govt securities etc.)	An asset held for a period of 12 months or less is a short-term capital asset.	An asset held for a period of 12 months or more is a short-term capital asset.
Units of UTI, whether quoted or not	An asset held for a period of 12 months or less is a short-term capital asset.	An asset held for a period of 12 months or more is a short-term capital asset.
Units of equity oriented mutual fund, whether quoted or not	An asset held for a period of 12 months or less is a short-term capital asset.	An asset held for a period of 12 months or more is a short-term capital asset.
Zero coupon bonds, whether quoted or not	An asset held for a period of 12 months or less is a short-term capital asset.	An asset held for a period of 12 months or more is a short-term capital asset.
Specified mutual funds	Acquired April 1, 2023 after irrespective of holding period  is short term	NA
Market Linked debentures(MLD)	Irrespective of holding period  is short term	NA

   

Tax Rates:

	LTCG	STCG
General Rule Sec 112	20% + SC+Cess	Normal Rate
Ref 112A for LTCG and Sec 111A for STCG 1)    Equity share on which STT is paid 2)    Unit of Equity oriented fund/Business trust on which STT is paid	10% in excess of Rs 1 Lakh	15%
Zero coupon bonds/NCD/Tax free bonds	20% with indexation or 10% without indexation	Normal rate
Sec 50AA: MLD	Always considered short term irrespective of holding period and taxable at Normal slab rate
Specified mutual funds	Always considered short term irrespective of holding period and taxable at Normal slab rate

 

	LTCG	LTCG Rate	STCG	STCG Rate
MLD and units of Specified MF (I.e., Debt MF which has invested in > 65% in debt) Gain arising from Transfer/Redemption or maturity Ref : Sec 50AA	Always STCG irrespective of Holding period taxable at slab rate
NCD (NCD’s are traded in exchange)	12months or more	10% without indexation or 20% with indexation WIL	12 months or less	Slab rate
Tax free bonds Sec 112	36 months or more	10% without indexation	36 months or less	Slab rate
Arbitrage Funds (Treated as Equity funds for taxation)	12 months or more	10% and no tax upto Rs 1 Lakhs	12 months or Less	15%
Liquid Funds	NA	NA	Usual holding is short term	Slab rate
Corporate Bond funds acquired before 1-Apr-2023	36 months or more	20% with indexation	36 months or less	Slab rate
Corporate Bond funds *	Always to be considered as Short term irrespective of holding period and taxable at normal slab rate Amendment in FA 2023
Equity Funds	12 months or more	10% and no tax upto Rs 1 Lakhs	12 months or Less	15%
ETF (Equity)	12 months or more	10% and no tax upto Rs 1 Lakhs	12 months or Less	15%
Debt ETF acquired before 1-Apr-2023	36 months or more	20% with indexation	36 months or less	Slab rate
Debt ETF *	Always to be considered as Short term irrespective of holding period and taxable at normal slab rate
Zero coupon bonds	12 months or more	20% with indexation or 10% without indexation	12 months or less	Normal
FMP acquired before 1-Apr-2023	36 months or more	20% with indexation	36 months or less	Slab rate
FMP *	Always to be considered as Short term irrespective of holding period and taxable at normal slab rate

 

*Recently vide amendment to Finance Bill 2023, gains from Corporate Bond Funds, Debt mutual funds and FMP’s acquired on or after 1-Apr-2023 will now be taxed at slab rates and they will be considered as short-term irrespective of the holding period. Which means you will lose out on the indexation benefit. Prior to 1st April 2023, debt mutual funds had to be held for more than 36 months to qualify as a long-term capital asset. It means you need to remain invested in these funds for at least three years to get the benefit of long-term capital gains tax. If redeemed within three years, the capital gains will be added to your income and will be taxed as per your income tax slab rate.