The 2018 Budget is likely to be a massive affair. From deciding the fate of the country and BJP’s fate in the next Union elections, this budget brings a lot of pressure with it.
Recently, Finance Minister Arun Jaitley also suggested that Long-term capital gain will be taxed, unlike previously.
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The market has witnessed a massive spike in equity market investments. After demonetisation, the stock market capitalisation has touched a whopping Rs 20,000 crore in November. The domestic investors (DIIs) have infused in Rs 8,000 in the equity market.
What are brokerages saying?
“While the implication of the impost on LTCG’s may sound like a death knell to investor sentiments and have an immediate adverse effect on the markets. Investors could shy away from equities and look at alternate investment modes,” Venu Madhav, Chief Operating Officer, Zerodha told stock market app Moneycontrol.
Possibility of increasing holding period Budget 2018
It is also being suggested that the government will increase the holding period to 3 years from the current 1 year. The imposition of Long Term Capital gain tax may be introduced for all gains made before 3 years of holding the investment.
If this happens, people will mull over long term investment and may not sell their securities and investment before the expiry of three years from purchase. Budget 2018
Imposition of STT Budget 2018
The stock market players are finding comfort in the fact that government may not impose Securities Transaction Tax (STT) on Long term transactions. This is a tax which is separate from the normal Capital gain tax. Budget 2018
In December 2016, PM Modi’s speech ushered in a lot of anxiety across the financial markets. “Low or zero tax rate is given to certain types of financial income. I call upon you to think about the contribution of market participants to the exchequer,” PM Modi said.
