Finance Ministry refutes speculation over hike in long-term capital gains tax, affirms new Income Tax Bill 2025 maintains existing rate structure
By Economy India | July 29, 2025
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NEW DELHI I Economy India: In response to recent media speculation, the Income Tax Department on Tuesday issued a clear clarification stating that the new Income Tax Bill, 2025 does not propose any change in existing tax rates, including those applicable to long-term capital gains (LTCG).
This statement comes amid reports suggesting that the upcoming legislation might increase tax rates on capital market earnings, sparking concern among investors and industry stakeholders.
“The draft bill does not propose any change in tax rates,” said the Central Board of Direct Taxes (CBDT) in an official communication.
No Change in Tax Rates Proposed in New Income Tax Bill: CBDT Clarifies
Background: Income Tax Bill 2025
The Income Tax Bill, 2025 is a comprehensive legislative proposal intended to modernize and simplify India’s income tax law, replacing the decades-old Income Tax Act, 1961. The new bill is expected to streamline compliance, clarify ambiguous provisions, and align taxation rules with evolving global practices.
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However, speculation around potential increases in LTCG tax rates had led to anxiety in the financial markets.
Government’s Assurance to Taxpayers and Investors
The clarification from the CBDT serves as a reassurance to taxpayers, investors, and capital market participants that there is no proposal to alter tax rates, including:
Income Tax slabs for individuals or corporates
Capital Gains Tax (Short-Term or Long-Term)
Dividend Distribution Tax (DDT)
Other direct tax rates
This move is being seen as an effort to maintain policy stability and avoid disruptions in capital flows or investor sentiment.
Industry Reaction
Tax experts welcomed the government’s clarification.
“This reassurance will calm nerves in the market. Stability in tax rates is essential to attract long-term investments,” said a senior tax consultant from a leading advisory firm.
Looking Ahead: Focus on Simplification
While no changes in tax rates are on the table, the bill is expected to bring about significant administrative and structural reforms, such as:
Simplified tax return filing procedures
Clearer definitions of income heads
Streamlined dispute resolution mechanisms
Enhanced digital compliance systems
The Finance Ministry has also indicated that public consultations may be held before the final draft is introduced in Parliament.
With the CBDT’s clarification, fears of an impending capital gains tax hike have been put to rest — at least for now. The focus of the new bill remains on simplification and modernization, not on altering the fundamental tax burden.
Investors and taxpayers can expect continuity in tax rates, as the government moves ahead with reforms aimed at ease of doing business and taxpayer-friendly administration.
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