The government may change the definition of “long-term,” raising the time limit for capital gains tax relief to a minimum of three years from one year at present. There is, however, no plan to introduce a long-term capital gains tax on stock trading. A change in the definition of “long-term”, if announced in the budget for 2017-18, could likely prompt millions of individuals who trade in stocks to shuffle their savings portfolio. Under current rules, gains made on a listed company stock are tax free is the investor exits after a year. The changed definition, however, would imply that investors—both retail and institutional—will have to pay 15 percent tax on the premium or gains made if the stock is sold within three years.
