Retail Investors Budget 2021 Expectations
Union Budget 2021-22 Expectations for Stock Market: The countdown for Budget 2021 has now begun. Apart from different sectors, retail investors also have expectations from the budget. Experts say that if there is some relief from tax on dividend, then the market participation of retail investors will increase further. At the same time, this will encourage investment and liquidity will increase in the market. Apart from this, getting some more relief in Long Term Capital Gain Tax (LTCG) can also be in the interest of investors. However, experts also say that the government’s spending on relief packages and other measures has increased continuously due to Corona. In such a situation, it is difficult to burden your treasury by giving relief in tax.
Retail investors will benefit
Jagdish Thakkar, director of Fortune Fiscal, says that if the tax relief on the dividend is received, the market earnings of the retail investors will increase. At the same time, increasing the participation of more and more investors in the market can also benefit from this. Anyway, these days the returns in fixed income investments are decreasing, so after getting relief from tax on dividend, those investors can also turn to equity, which gives priority to low-risk investment.
Let me tell you that earlier it used to be on the company paying the tax dividend. But companies said that after paying corporate tax, this tax is like a double whammy. After which the burden was put on the investors to give relief to the corporate.
What will be the effect
Investors will benefit if the tax on the dividend is withdrawn. Right now, investors coming in higher tax slabs are paying more tax. Their income will increase with relief. Currently, if a company announces a dividend, then the tax payer will have to pay the dividend. The amount of dividend will be added to some of his taxable income and he will be taxed accordingly, in the tax bracket he falls under. If a taxpayer falls in the 30 percent tax slab, then he will be charged 30 percent tax on it.
But this decision is not easy
However, Thakkar’s concern is that the tax relief on dividends or more relief on LTCG is finding some difficulty in this budget. He says that the economy has suffered due to the coronavirus epidemic last year. To bring the economy back on track, the government has increased its spending. In such a situation, the burden on the state exchequer is more than before. There is little hope that the government should reduce its income by giving relief in tax. Instead, the government will focus on accelerating the economy apart from creating more jobs by focusing on the infrastructure sector.
What happened in the last budget
According to the announcements made in the last budget, all types of dividend income i.e. dividend income from shares or mutual funds will be taxed by the investors. In this way, dividend income, which was earlier exempt from tax by investors, will now be taxed. That is, the actual income from the investors market will be reduced. In fact, in the Budget 2020, in a way, the burden of corporate was shifted to the investors.