The government's move to impose higher taxes on long-term capital gain (LTCG) and short-term capital gain (STCG) has left market guru Shankar Sharma surprised. In an exclusive interview with Business Today TV after the Union Budget 2024 presentation, the Founder of GQuant Investech, said, "I'm astounded that the government would do such a thing, given the fact the (general) election numbers were a tad below the expectations."
Just finished wiping my tears after the massive hikes in the capital gain taxes both for long-term and short-term, Sharma quipped.
"I was hoping that they would not do this, but they've done it and this is what it is. My real disappointment is that the last time they did something like this was in 2018, after the demonetisation period. LTCG was brought back to life from being non-existent for several years (from 2007). 11 years later LTCG came back and STT (Security Transaction Tax) didn't go out. So we had two unwelcome guests," the market expert stated.
When asked to share a view on the way forward, he said the market looks for a reason to correct at elevated levels. "With this hike in taxes, we've given a domestic homegrown reason on a platter. I hope it doesn't take it too seriously but I fear it might," Sharma added.
Finance Minister Nirmala Sitharaman, in her Budget 2024 speech, announced raising LTCG on all financial assets, including equity, to 12.5 per cent from 10 per cent presently. It raised the STCG tax to 20 per cent from 15 per cent earlier.
Sitharaman also announced an increase in STT on F&O (Futures & Options) transactions to 0.02 per cent from 0.01 per cent.
Meanwhile, she raised the exemption limit of capital gains on financial assets to Rs 1.25 lakh from Rs 1 lakh earlier. Listed financial assets held for more than 1 year will be considered long-term, the minister added.
Domestic benchmarks, which fell sharply after the Budget presentation concluded, recovered from the knee-jerk reaction during fag-end trade today.