The government takes more tax from those who earn money above a threshold. It is believed that people who invest money in equity and equity mutual funds have good income and savings after spending all the expenses. In such a situation, the government also collects tax on the income earned from such investments. This tax is called capital gains tax. There are two types of capital gains tax, short term and long term. The tax rates on these also vary.
The government had included the stock market in long term capital gains tax only last year. In the Union Budget 2023, Finance Minister Nirmala Sitharaman announced the deduction limit on long-term capital gain tax at Rs 10 crore. The new limit came into effect from April 1, 2023. Deduction for reinvestment in residential properties is allowed under sections 54 and 54F of the Income Tax Act. The Capital Gain Account scheme facilitates you to accumulate long term capital gains which can later be reinvested in property under Section 54 and Section 54F. Capital gains account schemes are available in major public sector banks.