Stocks to Mutual Funds, Zerodha CEO Nithin Kamath Highlights Major Changes in Capital Gains Tax for Various Investments

Capital Gain Tax: The CEO of Zerodha, Nithin Kamath, recently brought attention to important modifications to the capital gains tax system that Finance Minister Nirmala Sitharaman revealed in Budget 2024. A broad range of investments, including stocks, mutual funds, exchange-traded funds (ETFs), and unlisted bonds, are expected to be impacted by these developments. This is a thorough explanation of the implications of these changes for investors.

Capital Gains Tax Changes Explained

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A post shared by Nithin Kamath (@nithinkamath)

Taking to Instagram, Zerodha CEO Nithin Kamath wrote, "The change in capital gains in the budget affects all your investments, from stocks, mutual funds, and ETFs to unlisted bonds. Here is a quick snapshot of how the taxation change affects your investments by @quicko_official."

Short-Term Capital Gains (STCG) Tax

Long-Term Capital Gains (LTCG) Tax

Impact on Investors

Investors should take note of these developments since they will have an impact on the profitability of different assets over the long and short terms. Here's a closer look at how these modifications might affect investment approaches:

• Higher STCG Tax Rates: With the short-term capital gains tax rate increasing, investors might be discouraged from short-term trading and might prefer holding assets longer to benefit from lower long-term tax rates.

• Increased LTCG Tax: Investors must reevaluate their long-term investment strategy in light of the increase in the long-term capital gains tax to 12.5%, particularly for assets like equities, mutual funds, and exchange-traded funds (ETFs) that were previously subject to a lower tax rate.

• Holding Periods: For listed assets, the holding period remains at 12 months to qualify for long-term capital gains. For unlisted assets and physical real estate, the holding period is 24 months to qualify for long-term capital gains.