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The union government has no plans to abolish long term capital gains (LTCG) tax on equities and mutual funds, ministry of finance told Parliament on Tuesday in reply to a question raised in the House.

The government has also said it has no plan to increase the period of LTCG from one year to two years for mutual funds and equities.

On whether the government would increase LTCG on mutual funds and equities from one year to two years and would abolish the taxes on LTCG to boost the sentiments of the economy and accelerate speedy recovery after Covid, the government said, “there is no such proposal under consideration."

The long term capital gains on the sale of listed equity shares have been made taxable from April 2018. In the case of equity investing, long-term means a holding period of more than one year from the date of purchase. Long-term capital gains are the profits earned on the sale of listed equity shares.

Before 2018, the long term capital gains earned on equity investing was tax-free.

The government has also disclosed the revenue it earned from LTCG for the assessment years 2018-19 to 2020-21. For AY 2018-19, the government has earned 1,222 crore. Similarly, for AY 2019-20 and AY 2020-21 has garnered 3,460 crore and 5,311 crore respectively.

In equity investing, there is also a short term capital gains tax, which will be taxed 15% irrespective of the income tax slab, for the sale of equity shares within a period of 12 months.

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