Abolition of classification of CA into short term and long term may hit hard to investors as tax liability may increase. Can it not have adverse impact?
It is difficult to generalize. If we look at the proposed provisions in totality, it may not be so. For example, under the ITA period of holding of IA in the form of immovable property is three years. As per the proposed code it will be less than that as there will not be classification of IA like shares of listed companies, immoveable properties etc. Provisions regarding holding period are applicable to all the IA. Secondly, by shifting the base period from 1981 to 2000, those who are holding the IA over a longer period of time will get substantial benefit as the CG accruing during the said period will be tax free. Looking from the equity point of view also, if tax has to be levied on appreciation in value of IA, there is no justification for classifying the IA into different classes and giving soft treatment to certain class of assets. Those who are investing in the shares may find it restrictive. However, to some extent, it may impart some stability to movement in the prices of shar
