Union Budget 2018: Why LTCG On Equity May Not Be Reintrodcued This Year Too?

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As it is Indian stock markets have reached new peaks with the Nifty in intraday trade on January 19, 2018 reaching new highs of 10,900 and with such peak valuations, correction is highly anticipated. And given the likely implementation of LTCG on equities which currently stands nil since 2014 will bring about an additional correction of 3-5% as cited by experts.

Coupled with this there are a few other reasons:

Last full budget of NDA govt before federal elections

The general assembly elections are slated for next year and this year Modi govt will prove on its efficiency to sustain the power and it is unlikely to bring any such inclusion of LTCG on equities this year which can result in panic sell-off in the market to cause a huge impact on the economy directly.

Dampen the euphoria in stock markets

 The current need of the economy is more of expenditure and investment to give it a boost and any tinkering or exemption relaxed on the LTCG front will play fatal for the markets which is currently getting a good fund flow from both the international and domestic fronts.

STT taxed on equities may also not be touched upon

 If experts are to be go by any change in the securities transaction tax is also unlikely. And as the experts see that STT paid on equities makes up for the LTCG on them, its reintroduction in light of the current economic situation does not holds good.

Conclusion

When the last time the LTCG was withdrawn away in 2014, it resulted in huge volume turnover change on both the exchanges and one may hence account for the reverse that its reintroduction can bring in.

Story first published: Saturday, January 20, 2018, 9:31 [IST]
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