facebook

Taxation Structure of Different Investment Structures

Last Updated: March 24, 2023

The capital gains tax regime can be complex, with different rates & threshold period for different asset classes & investment structures. We provide below a handy table, that helps explain the tax-rates across asset clases.

Asset TypeShort-Term CG RateLong-Term CG RateLT Holding PeriodIndexation Period
Equity Shares15%10% (in excess of 1 lakh)1 yearNo
Equity MF (1)15%10% (in excess of 1 lakh)1 yearNo
Non-Equity MF (2)Slab RateSlab RateNANA
Unlisted Shares (3)Slab Rate20%2 yearsYes
Listed BondsSlab Rate10%1 yearNo
Real EstateSlab Rate20%2 yearYes
REIT/InVit15%10% (in excess of 1 lakh)3 yearsNo
Physical GoldSlab Rate20%3 yearsYes
Soveriegn Gold BondsSlab Rate20% (tax free if held till maturity of 8 years)5 yearsYes

CLASSIFICATIONS

  • (1) Equity Mutual Funds: Includes pure equity funds, aggressive hybrid, equity savings & arbitrage funds (since arbitrage is considered equity from a tax perspective)
  • (2) Non-Equity Mutual Funds: include all Mutual funds with less than 35% of investment in Indian Equities (i.e. Debt funds, conservative hybrid funds, international feeder funds, Gold Funds etc) | ETFs (International, Gold etc) are also considered non-Equity MF’s from a taxation perspective
  • (3) Direct International via International Brokers: taxed similar to Unlisted Shares

Setting-off for Capital Losses

  • Long-term Capital Losses, can only be set of against Long-Term Capital Gains.
  • Short-term Capital Losses, can be set of against Short-term & Long-Term Capital Gains.
  • Capital losses can be carry-forwarded for 8 years, from the assessment year in which the loss was computed