In a much-needed clarification, the Indian government has officially denied any increase in Long-Term Capital Gains (LTCG) tax rates under the proposed Income Tax Bill, 2025. This comes amid growing concern among tax experts and investors—especially those involved with Limited Liability Partnerships (LLPs)—about potential changes in the tax regime.
This reassurance offers relief to stakeholders fearing increased tax liability and significant impact on the LLP investment structure.
Speculation erupted on social media platform X (formerly Twitter) after some tax professionals and users claimed that the language in the draft Income Tax Bill, 2025 suggested a potential rise in the effective LTCG tax rate for LLPs—from 12.5% to 18.5%—due to modifications in the Alternate Minimum Tax (AMT) provisions.
This sparked concern among investors, LLP partners, and tax advisors, who worried that the structural tax benefits of LLPs might be compromised under the new bill.
To clear the air, the Income Tax Department issued a clarification via its official handle on X, stating:
"The purpose of the Income Tax Bill, 2025 is solely to simplify the language, eliminate outdated provisions, and consolidate existing rules. There is no intention to change any tax structures or rates."
The department emphasized that the AMT clauses in the new bill are essentially identical to those in the current Income Tax Act of 1961. Any perceived ambiguity in the draft will be resolved, and no structural change in LTCG taxation has been proposed.
A top government official confirmed to CNBC-TV18 that:
"The bill is focused only on restructuring provisions in simpler language. If any tax rate revision ever needs to be done, it would be introduced through the Union Budget, not this draft legislation."
This statement further reinforces that there is no policy change being made through the Income Tax Bill, 2025. The government has made it clear that simplification, not modification, is the core agenda.
The bill is expected to be tabled during the Monsoon Session of Parliament. Over 332 suggestions have already been submitted to the Parliamentary Committee, with specific focus on clauses relating to:
Capital Gains
Tax Exemptions
Alternate Minimum Tax (AMT)
Tax authorities and policymakers are open to refining the language of the bill wherever needed to prevent misinterpretation.
✅ No hike in LTCG tax rates has been proposed.
✅ LLPs will not face additional tax burden under the new draft.
✅ Government committed to transparency and clarity in tax legislation.
✅ Any future tax rate changes will follow the formal Budget process, not hidden clauses in reform bills.
The panic surrounding LTCG rate hikes appears unfounded, and investors can breathe easy for now. The government’s firm reassurance means LLPs and investors will not see their tax liabilities change, at least under the Income Tax Bill, 2025.
As always, staying updated with official announcements and consulting credible tax professionals remains the best approach to ensure financial compliance and peace of mind.
