Answer

HNI wealth · PMS

Surcharge on HNI capital gains: the bracket that hurts

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  1. Facts

    For LTCG on listed equity (and equity-oriented MFs), surcharge is capped at 15% regardless of income level, this was a Budget 2023 relief. So for an individual with ₹10Cr income, LTCG on equity PMS is taxed at: 12.5% × (1 + 15% surcharge) × (1 + 4% cess) = 14.95% effective rate, the same as someone earning ₹50L.

  2. Provisions and law

    • IT Act, Sec 198 (old 112A) | Finance Act 2023 surcharge cap

  3. Analysis

    For STCG on equity: Also capped at 15% surcharge from Budget 2023. So STCG effective = 20% × 1.15 × 1.04 = 23.92%. For debt or non-equity gains (including most structured products): No surcharge cap. Maximum surcharge 37% applies. On ₹5Cr+ income: effective rate on debt gains can touch 42.74%.

  4. Conclusion

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