Budget 2022 expectations: As Union Finance Minister Nirmala Sitharaman is all set to present her third budget on 1st February 2022, various industry insiders are busy forwarding their list of demands. While real estate sector is asking for its age old industry status to be granted in the upcoming budget 2022, stock market insiders are seeking removal of LTCG Tax (Long Term Capital Gain Tax). They said when stock investor is already giving Security Transaction Tax (STT), then what the logic behind LTCG Tax is. They were of the opinion that transaction cost in India is too high and LTCG and STT are seen as a sentiment dampener for the market.
Seeking removal of LTCG or STT tax from stock market investments; Sunil Nyati, MD at Swastika Investmart Ltd said, “I believe STT should be removed or at least reduced because initially it was introduced in the place of long-term capital gain (LTCG) but now, we have both LTCG and STT that is not fair for the Indian stock market investors. Stock market penetration is increasing in India and it is anticipated that the government will take policy measures to ensure that the Indian market becomes more investment-friendly in comparison to other emerging markets where reducing LTCG and STT could be a good step in that direction. The transaction cost in India is too high and LTCG and STT are seen as a sentiment dampener for the market.”
Speaking on how government’s taxation policy is unfair with stock market investors; Anuj Gupta, Vice President at IIFL Securities said, “A stock market investor has to face dual taxation in the name of STT and LTCG. After paying these taxes, if an investor is able to gain from the markets, then it will get added in one’s income from other sources as well. So, a person earning from the stock market is paying the Indian government on three windows. So, it’s high time for the Union Minister Nirmala Sitharaman to remove LTCG Tax and make investor-friendly environment in the Indian stock market.”
Echoing with Anuj Gupta and Sunil Nyati; Avinash Gorakshkar, Head of Research at Profitmart Securities said, “Demand for removal of LTCG Tax is not new. Various delegations and market representatives have been raising this demand at appropriate platforms but the government has been turning it down citing they will lose a good amount of revenue if they remove LTCG Tax or reduce STT Tax. But, the Union Minister Nirmala Sitharaman has to realise that such a high tax imposition is hitting the penetration of stock market. If they address the taxation structure in stock market, more income coming to the pocket of investors will lead to rise in income tax collection as well.”
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