Budget 2023: Will government make changes to capital gains tax regime

Budget 2023: As the countdown to Budget 2023 begins, noises around the capital gains tax regime have started getting louder. The talks began after former revenue secretary Tarun Bajaj, in an interview with CNBC-TV18 in November, said that they had done some preparations to review the capital gains tax and now it depends on policymakers. Bajaj said that the Indian capital gains tax regime is complicated and needs simplification.

Bajaj had said there was a "pressing need" to align the capital gains tax rates and holding periods across asset classes to minimise the room for market-distorting tax arbitrage amongst products.

CNBC-TV18 spoke to various tax experts, and they said that since this is the last full Budget before elections in 2024 and it is possible that the government may want to do something meaningful in terms of tax rationalisation.

Most experts agree that rationalising the holding period threshold could be the first step. In the US, for example, the holding period to be able to be eligible to gain from long-term capital gain tax is one year.

Will there be changes to the tax rate itself? Opinions remained divided on this topic.