Tax on long term capital gains (LTCG) is back. Since a window has now been opened to taxing this income by introducing a flat rate that treats this income differently from other sources of income, it can only be expected that substantial tinkering will happen in this section of the Income Tax Act in future.
Should capital gains be taxed? The argument is that income that an asset generates should be booked to tax, irrespective of whether it is a human asset or a capital asset. Subjecting individual incomes to tax, and exempting capital assets from tax, creates incentives to engage in acquisition of capital assets, without deploying such resources in income generating activity.
