Stock markets and mutual fund investors separately expect relief in Long Term Capital Gains (LTCG) tax. The abolition of LTCG tax on the sale of listed equity shares will encourage investment through stock exchanges.
Budget 2022 Expectations: Finance Minister Nirmala Sitharaman is going to present her fourth budget on February 1. Stock market and mutual fund investors also have many expectations from this year’s budget. Stock markets and mutual fund investors separately expect relief in Long Term Capital Gains (LTCG) tax. Experts believe that the abolition of LTCG tax on the sale of listed equity shares in India will encourage investment through stock exchanges.
What do experts say
- Experts associated with Tax2Win said, “Investors’ confidence was broken with the introduction of Long Term Capital Gains Tax (LTCG). LTCG tax on sale of listed equity shares in India should be exempted by the government. Alternatively, it can offer tax breaks to investors who have held assets for more than two years. There is no LTCG tax in major economies. The government may consider abolishing it to encourage investment through stock exchanges.”
- Saurav Sood, International Tax Expert, SW India, said that the disparity between LTCG and income up to Rs 5 lakh per annum should be removed.
- Sood further said, “Individually, income is taxable as per slab rates, so that no tax is payable on income up to Rs 2,50,000. Combining standard deduction, marginal relief benefit and section 80C benefit may create a situation where no tax is payable on income up to Rs 500,000 annually. However, in case of long term capital gains, such exemption is only up to Rs 1,00,000. This disparity needs to be addressed by raising the exemption limit for long term capital tax to a higher level.”
- Sood further said that the slab rate of tax for an individual currently increases to 30%. Such a high tax rate should be reduced, rather the government should find ways to increase the tax base by tightening the penal provisions for non-filing of tax returns.
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in asset class LTCG demand to simplify
Experts from the Confederation of Indian Industry (CII) have also recommended the government to simplify capital gains taxation for stability in tax rates and holding periods for different asset classes.
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Demand to remove speculative income concept
Experts believe that Budget 2022 helps to accelerate equity markets and to do so, the government should consider all possible measures. Puneet Maheshwari, Director, Upstox said, “The government should do away with the concept of speculative income and limit income classification from capital market transactions to business income, long term capital gain and short term capital gain. We are hopeful that the government will consider tax exemption up to Rs 1,00,000 lakh on short term capital gains tax and tax exemption on dividend up to Rs 50,000 for senior citizens.”
(Article: Rajeev Kumar)
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