The Finance Minister Nirmala Sitharamanin Budget 2023 has proposed certain major changes in Capital Gain Tax.
The proposed changes are,
The bill proposed that an exemption to Tax on capital gains can be avoided by investing proceeds of such gains in residential property and this is proposed to be capped at ` 10 crore.
It was also proposed that the income from market linked debentures is proposed to be taxed as short-term capital gains at the applicable rates.
An exemption was given in case of the proceeds of the insurance policy. It is proposed to provide that where the aggregate of premium for life insurance policies (other than ULIP) issued on or after 1st April, 2023 is above ` 5 lakh, income from only those policies with aggregate premium up to ` 5 lakh shall be exempt. This will not affect the tax exemption provided to the amount received on the death of a person insured. It will also not affect insurance policies issued till 31st March, 2023.
A major amendment for computing capital gains has been brought in case of joint development of property to include the amount received through cheque etc. as consideration.
In case of interest paid on borrowed capital for acquiring or improving a property certain condition have been laid up claiming deductions, it can also be included in the cost of acquisition or improvement on transfer, thereby reducing capital gains. The cost of acquisition or improvement is expected from the amount of interest claimed earlier as deduction.
There are certain assets like intangible assets or rights for which no consideration has been paid for acquisition and the transfer of which may result in generation of income. Their cost of acquisition is proposed to be defined to be NIL.
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