New Delhi: Presenting the Budget 2024 in the Lok Sabha on Tuesday, Finance Minister Nirmala Sitharama proposed to increase Long Term Capital Gains (LTCG) tax and Short Term Capital Gains (LTCG) tax on equities along with Securities Transaction Tax (STT) on futures contracts. Sitharaman has proposed to increase STT on futures from current 0.01 per cent to 0.02 per cent.
Currently, the STT rate for selling options is 0.017 per cent, while for futures, it is 0.01 per cent. Sitharaman’s proposal will make stock market trading more expensive for retail investors. Given the latest concerns being repeatedly raised by the Securities and Exchange Board of India (Sebi), chief, Madhabi Puri Buch, on numerous occassions regarding increasing participation of retail investors in the highly speculative futures and options (F&O) segment, it was expected that the government might adopt regressive steps in the Budget 2024. This would discourage retail participation in the relevant segment.
The finance minister put forward a proposal to hike LTCG tax to 12.5 per cent from 10 per cent currently and the STCG tax to 20 per cent from 15 per cent, currently.
On hike of capital gains taxes, India’s stock market indices nosedived on Tuesday. The 50 constituent Nifty plummeted 0.62 per cent to below 24,400 points. While, 30 constituent Sensex was down 0.54 per cent to around 80,000 mark at 13:00 hours on Tuesday. Larsen & Toubro, Bajaj Finance, Power Grid, Reliance Industries, State Bank of India and Bajaj Finserv were the major laggards in Sensex.
Another measure proposed by Sitharaman in the Budget 2024 pertaining to India’s stock market is that the government has proposed to raise capital gains exemption limit on certain financial assets to Rs 1.25 lakh per year for middle and upper middle class. Earlier, this was Rs 1 lakh. This will enable retail investors to save on long term capital gains tax to be paid on certail financial assets.
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Retail Investors will be left with less capital gains on hand on stock market trades made for the long term as Finance Minister Nirmala Sitharaman’s proposed to hike LTCG tax rate on equities in the Budget 2024. Markets Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
