No gains, no tax. Markets to take tax hikes in stride
fiscal prudence and whether the budget would indicate a populist turn by the government. However, the message is that of continuity. Apart from the increased allocation of resources to the states of the two coalition partners, there does not seem to be any meaningful difference between the earlier budgets and the current one. The government continues to be on the path of fiscal prudence and consolidation.
There is an emphasis on employment, skilling, and the social sector, and rightly so. There has been some worry about economic growth not fully translating into employment growth. Given the increasing number of young Indians joining the workforce, it was important to address the skilling needs of the people and incentivise the companies to hire more freshers. Encouragement for domestic manufacturing and services continues and the measures announced were on expected lines.
Market players may be disappointed by the somewhat higher rates of Capital Gains Taxes and Securities Transaction Tax (STT). Given the recent statements of the RBI governor and the Sebi chairperson, some disincentives related to the capital markets were expected, especially given the frenetic pace of speculative transactions in the Futures and Options segment.
The market will take these measures in their stride. After all, there is no tax to be paid unless one sells the stocks and realises the gains. The somewhat higher rate of tax may encourage investors to hold on longer and dampen the speculative urge to some extent.
Simplification of the
