Investors ignore impact of capital gains tax till it’s too late. A rationalised tax structure will make it easier to correct this
One aspect of investments that a lot of new investors have trouble understanding is capital gains and the bewildering variety of ways in which it is applied in India. A recent statement by Tarun Bajaj, the revenue secretary, has hinted that the government has acknowledged this as an issue that affects savings and investment behaviour and is preparing to restructure capital gains tax.
The basics of capital gains often comes as a surprise to new savers. Used as people are to banks, the idea that the income that deposits generate is taxed as income as it is earned is pretty natural. When it comes to getting some gains from an investment and then paying tax on it, it comes as a surprise to them that separately from income tax, there is an entirely different kind of tax. It doesn’t matter what their income slab is or how their salary is structured, this is a different calculation altogether.
The basics of capital gains often comes as a surprise to new savers. Used as people are to banks, the idea that the income that deposits generate is taxed as income as it is earned is pretty natural. When it comes to getting some gains from an investment and then paying tax on it, it comes as a surprise to them that separately from income tax, there is an entirely different kind of tax. It doesn’t matter what their income slab is or how their salary is structured, this is a different calculation altogether.