Rate of capital gains tax for Discretionary private family trust

For AY 24-25, the rate of LTCG is 12.5% and STCG is 20% . (After date of budget)

The surcharge will be applicable as per tax slabs. 

- For FY 2023-24

> From 01.04.2024 to 22.07.2024 - STCG - 15%, LTCG -10%

> From 23.07.2024 - STCG-20%, LTCG-12.5%

- Maximum rate of surcharge is 15%

For the Financial Year 2023-24, the rates applicable for a Discretionary Private Family Trust holding listed equity shares have undergone changes based on the periods mentioned:

1. For the period from 01.04.2024 to 22.07.2024:

• Short-Term Capital Gains (STCG):
• Rate: 15%
• Maximum Surcharge: 15%
• Effective Rate: 15% + 15% surcharge + 4% cess = 18.36%
• Long-Term Capital Gains (LTCG):
• Rate: 10%
• Maximum Surcharge: 15%
• Effective Rate: 10% + 15% surcharge + 4% cess = 11.96%

2. For the period from 23.07.2024 onwards:

• Short-Term Capital Gains (STCG):
• Rate: 20%
• Maximum Surcharge: 15%
• Effective Rate: 20% + 15% surcharge + 4% cess = 23.92%
• Long-Term Capital Gains (LTCG):
• Rate: 12.5%
• Maximum Surcharge: 15%
• Effective Rate: 12.5% + 15% surcharge + 4% cess = 14.74%

These rates reflect the changes in tax policy for discretionary private family trusts investing in listed equity shares, with the maximum surcharge capped at 15% during the financial year 2023-24.

For a discretionary private family trust in India, the taxation of short-term capital gains (STCG) and long-term capital gains (LTCG) from listed equity shares follows specific rules:

1. Tax Rates on Capital Gains

Short-Term Capital Gains (STCG)

• 
  Rate: Short-term capital gains on listed equity shares are taxed at 15%.
• 
  Applicable Under: Section 111A of the Income Tax Act.

Long-Term Capital Gains (LTCG)

• 
  Rate: Long-term capital gains on listed equity shares are taxed at 10% if the gains exceed ₹1 lakh in a financial year.
• 
  Applicable Under: Section 112A of the Income Tax Act.

2. Surcharge on Capital Gains

The surcharge is applicable based on the total taxable income of the trust. Here’s how it works:

• 
  STCG and LTCG are added to the total income of the trust, and the applicable surcharge is then determined based on the total income.

Maximum Surcharge Rates:

• 
  Up to ₹1 crore: No surcharge.
• 
  From ₹1 crore to ₹2 crore: 10% surcharge.
• 
  From ₹2 crore to ₹5 crore: 15% surcharge.
• 
  Above ₹5 crore: 25% surcharge.

Note: The maximum surcharge rate applicable on STCG or LTCG for a discretionary private family trust can be 25% if the total income exceeds ₹5 crore.

3. Health and Education Cess

• 
  Rate: In addition to the income tax and surcharge, a 4% Health and Education Cess is applicable on the total tax including surcharge.

Summary

• 
  STCG on Listed Equity Shares: Taxed at 15%. Surcharge can go up to 25% depending on total income.
• 
  LTCG on Listed Equity Shares: Taxed at 10% on gains exceeding ₹1 lakh. Surcharge can go up to 25% depending on total income.