Understanding the premise
Many taxpayers wonder if the benefits of the new tax regime for regular income also eliminate taxes on investments such as equity capital gains. The short answer: no; capital gains are taxed separately from your salary or business income.
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How the new regime treats ordinary income
In the current framework, the nil tax slab applies to taxable income. The commonly cited threshold for zero tax on regular income is not a blanket ₹12 lakh; the regime still leaves a basic zero rate up to a relatively lower slab (for example, up to 2.5 lakh for most taxpayers after deductions). Beyond that, rates apply as per the regime’s slabs, with or without certain deductions depending on the regime you choose.
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Capital gains on equity: the tax rules you must know
Long-term capital gains (LTCG) on listed equity shares remain taxable if gains exceed ₹1 lakh in a financial year, at 10% without the benefit of indexation. Short-term capital gains (STCG) arise when shares are sold within 12 months and are taxed at 15%. These rates are not altered by your choice of tax regime for salaries or business income.
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Practical takeaways for investors
- Do not assume zero tax on capital gains even if your earned income falls in the low or nil bracket.
- Keep records of purchase dates, prices and sale proceeds to determine LTCG vs STCG treatment.
- Review the regime you file under carefully; the new regime disallows many common deductions, which can affect overall tax liability.
- Consider professional guidance if you have substantial equity investments or complex holdings.
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Next steps
Check your annual tax computation under both regimes to decide which option minimizes tax; file your ITR accordingly and ensure compliance with reporting requirements for capital gains and securities transactions.
