Tuesday, 21 August, 2018

Government will look into market slump: Hasmukh Adhia

Around 25 per cent of the respondents were in favour of reducing the peak income tax rate to 25 per cent from 30 per cent Government will look into market slump: Hasmukh Adhia
Nellie Chapman | 07 February, 2018, 06:00

According to Finance Secretary Hasmukh Adhia, the Indian stock markets continue to fall owing to a global shake-up, as the correction in the equity markets across the world creates a ripple effect. The Finance Secretary said what happened in next few days was mainly because of a global shake-up. For this objective the appreciation in stock values post 31 January, 2018 alone would be considered. As against that, Nifty came down by 3.2 percent, and Sensex by 3.36 percent. "Those start-ups registered with the department of industrial policy and promotion are also not under the scanner", said Adhia, while addressing members of the Federation of Indian Chambers of Commerce and industry in a post budget discussion. The LTCG, however, is being grandfathered.

The proposed long-term capital gains or LTCG tax on equity holdings will apply on profits made from sale of shares on or after April 1, 2018, the Government said on Monday. We couldn't have changed the Budget date, we had to put it in the Budget, but the world global meltdown in the stock exchanges came at a very wrong time for us.

Earlier in 2015, the minister had pledged to bring down corporate taxes to 25 percent from 30 percent over four years. Is there any logic of keeping one class of investments, completely out of the tax net? You have a choice. "All these options are available for you", he said.

Investors shall also consider STT and buy/sell price spread against probable tax saving before taking any call on booking long term gains and taking a new position.

While the tax will kick in on shares sold on or after April 1, the acquisition cost for the objective of computing the capital gains will be the higher of the actual purchase price or the maximum traded price on January 31, it said.

The levy would apply to equity shares of a listed company, unit of an equity oriented fund and unit of a business trust.

"It is a potential risk also, particularly to the small investors".

"When all other factors of production such as wage employment, where after hard labour one gets salary, are also subject to full taxation, it is not a good idea to keep anyone class of investment completely exempt from taxation".

Finance Minister Arun Jaitley had in his Budget speech announced that all long term investment gains of over Rs 1 lakh, beginning February 1, 2018 will attract a long term capital gains tax at the rate of 10 per cent.