Govt likely to raise STCG tax above 20% in future, says official

The official told Moneycontrol that the gains from short-term trading, referred largely to shares or mutual fund units held for less than a year, should not be equated with investment and suggested that the current rate of 20 percent is reasonable but could go up.

"STCG is not an investment. No reason why STCG should be at 20 percent. It can be higher," the official was quoted as saying by Moneycontrol.

Finance Minister Nirmala Sitharaman, in the Union Budget 2024 presented on July 23, raised the STCG tax on specific financial assets to 20 percent from 15 percent.

An official, who spoke to Moneycontrol on condition of anonymity, said that a higher tax rate on short-term gains would not adversely affect the economy or the capital markets.

"Vis a vis other incomes, 20 percent STCG is reasonable. It does not impact the growth of the economy or the capital markets. It can go up further," the official was quoted as saying by Moneycontrol.

This perspective suggests that the Centre views STCG as a more viable area for tax hikes compared to other forms of income, according to Moneycontrol.