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New Income Tax Rules on Capital Gains: What’s Changing in 2025?

The Income Tax Bill 2025 brings notable changes to capital gains taxation, particularly Section 54EC exemptions. One of the most significant amendments is the replacement of “long-term capital asset” with “long-term capital gain” in Section 85 (previously Section 54EC).

This change directly impacts taxpayers who previously claimed exemptions on short-term capital gains from depreciable assets held for over 36 months. The amendment closes this loophole and ensures that only genuine long-term capital gains qualify for tax exemptions.

Let’s explore the details of the new capital gains tax structure and what it means for investors.

Key Changes in Capital Gains Taxation Under the Income Tax Bill 2025

🔹 Section 54EC Amendment
✅ Previously, as per CIT v. Dempo Company Ltd (2016), even short-term capital gains from depreciable assets (held over 36 months) could qualify for exemptions under Section 54EC.
✅ The new rule restricts the exemption strictly to long-term capital gains, overriding the Dempo judgment.
✅ This means short-term capital gains on depreciable assets no longer qualify for tax exemption, regardless of how long they were held.

📌 Impact: Businesses and investors who relied on this exemption must reassess their tax-saving strategies.

Capital Gains Tax Structure for 2025

The government introduced a simplified capital gains tax regime from July 23, 2024, to replace the earlier complex tax structure.

Categories of Capital Assets

Capital assets are now classified into:
1️⃣ Listed securities (e.g., equity shares, equity-oriented mutual funds).
2️⃣ Unlisted securities & non-financial assets (e.g., unlisted shares, foreign shares, real estate).

Short-Term vs. Long-Term Capital Gains

📌 Exemption on Long-Term Capital Gains:

• Long-term capital gains on listed securities enjoy a ₹1.25 lakh tax-free exemption per year.
• Beyond this limit, LTCG is taxed at 12.5%.

Special Tax Treatment for Real Estate Investors

📌 For properties purchased before July 22, 2024, and sold after July 23, 2024:

• Taxpayers can choose:
  🔹 12.5% without indexation, or
  🔹 20% with indexation (adjusting for inflation).

✅ This provides relief for homebuyers who invested in real estate before the new tax regime.

What This Means for Investors & Taxpayers

✔ Short-term gains from depreciable assets no longer enjoy tax exemptions under Section 54EC.
✔ Listed securities now have a simplified tax structure, with a fixed 12.5% tax rate on LTCG beyond the ₹1.25 lakh exemption.
✔ Real estate investors can benefit from an indexation-based tax option for properties purchased before July 2024.
✔ Unlisted securities and foreign shares are taxed at standard income tax slabs for short-term gains, while LTCG is taxed at 12.5%.

🚀 Pro Tip: Investors should reassess their portfolio and tax-saving strategies in light of these new regulations.

Final Thoughts: Be Prepared for the New Capital Gains Tax Rules

With the Income Tax Bill 2025, the government aims to simplify capital gains taxation and eliminate loopholes.

✅ For stock market investors – Take advantage of LTCG exemptions up to ₹1.25 lakh.
✅ For real estate investors – Understand your tax options before selling a property.
✅ For businesses – Short-term capital gains from depreciable assets will now be fully taxable.

💡 Stay informed, plan ahead, and consult a tax expert if needed to optimize your tax liabilities!

🔎 Got questions about capital gains taxation?
💬 Drop your queries in the comments, and let’s discuss! 🚀

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