On Friday, Finance Minister Nirmala Sitharaman said that her ministry will wait for one "normal year" before taking a call on abolishing long term capital gains (LTCG) tax on equities.
Addressing criticism on failing to address the concern at recently presented Union Budget, Sitharaman said that LTCG was introduced in 2018 and the volatility in the markets have ensured that she cannot make a reasonable assessment on it.
"Much before let us say I have burnt my fingers, I am told withdraw it. The reason why we didn't go that far on LTCG is because let us have an assessment at least one-year of a normal response to a tax. Lets us hope this year, after which we would take up considered view," she said
Speaking to opinion makers and analysts in Mumbai, the finance minister added that the removal of dividend distribution tax (DDT) to shift the liability on investors from the company was made to reduce middle-class investors' outgoes.
Revenue Secretary Ajay Bhushan Pandey said that the government's view is that all kinds of incomes need to be taxed, and not levying it on a particular stream like LTCG will create arbitrage opportunities.
On 1 February, stock market benchmark indices fell by over 2.5 percent. Word on the street was that it was because investors peeved at the absence of any action on LTCG and the shift on DDT.