Finance Minister Nirmala Sitharamanin Budget 2023 has proposed some major changes to capital gains tax.
The proposed changes are,
The bill proposed that an exemption from capital gains tax could be avoided by investing the proceeds of such gains in residential property and it is proposed to be capped at `10 crore.
It has also been proposed that income from market-linked debentures be taxed as short-term capital gains at the applicable rates.
An exemption was granted in case of insurance policy proceeds. It is proposed to provide that where the total premiums for life insurance policies (other than ULIP) issued on or after 1st April 2023 is above `5 lakh, only income from policies with aggregate premium up to `5 lakh will be exempt. This will not affect the tax exemption given to the amount received on the death of an insured person. It will also not affect insurance policies issued until 31st March 2023.
A major change for the calculation of capital gains has been made in the case of joint development of a property to include the amount received by check etc. in return.
Where interest paid on capital borrowed to acquire or improve a property has been set up to claim deductions, it may also be included in the cost of acquisition or improvement upon transfer, thus reducing the most -values. The cost of acquisition or improvement is expected to be deducted from the amount of interest previously claimed.
There are certain assets such as intangible assets or rights for which no consideration has been paid for the acquisition and the transfer of which may result in the generation of income. It is proposed to define their acquisition cost as NIL.
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