Do away with either capital gains tax or STT; lower income tax: Vikas Khemani
Vikas Khemani, Founder, Carnelian Asset Management, says in India, both capital gains tax and STT exist, which is strange. STT was introduced when capital gains were removed. Now that capital gains are back, STT is still here. The STT collections are around Rs 35,000-40,000 crore. It is unfair to keep both taxes. It would be better if the government eliminated one of them. This year, Khemani expects personal income tax to decrease because our personal income tax rates are quite high.
Was there a fear in the market on Tuesday that there could be change in taxation and that triggered the market selloff? Was there an iota of concern?
Vikas Khemani: I really do not think there was much expectation of short-term capital gain, long-term capital gain getting changed. Of course, there are talks about the whole income tax act getting re-drafted, but I do not think there was much of a panic based on that. I think as far as capital gains tax is concerned, we are reasonably high as compared to the rest of the world and last year, the government hiked it. So, there is no reason for the government to tinker again.
We are a unique market where you have both capital gains and STT, which itself is bizarre. STT was levied when the capital gains were done away with. Capital gains came back and STT remained. And STT collections are Rs 35,000-40,000 crore. In my opinion, it is absolutely unfair to continue both taxes. Rather I would say it will be positive if the government does away with one of them, either you take away STT or you
