Rupee closes at an all time low on LTCG and STCG tax increase
markets after Finance Minister Nirmala Sitharaman proposed to increase tax rates on long-term capital gains (LTCG) and short-term capital gains (STCG).
The rupee ended at 83.687/$1, after slipping to a record intraday low of 83.71/$1 during the day, LSEG data showed. The previous all time low was ar 83.67/$1
The Indian benchmark equity indexes ended slightly lower after dipping more than 1% during the day. “We will have to wait and watch how the stock market also reacts in the long term”, dealers said.
Market participants expect the RBI to step in and prevent the rupee from weakening much past 83.70 levels. The rupee is expected to trade in the range of 83.77 to 83.57 during the week, dealers said.
“After any announcement there is a knee jerk reaction which we saw today. I am expecting the rupee to appreciate tomorrow to around 83.65/$1, and there will be a good support at 83.55 levels”, a foreign exchange dealer at a state run bank said.
The government lowered its fiscal deficit target to 4.9% of GDP, from 5.1% target in the interim budget in February. This is good for India from a global rating perspective and also encourages foreign investor participation in the country.
The Reserve Bank of India likely intervened at 83.69-83.71 levels and helped cap the decline in the currency.
The Finance Minister announced that long-term capital gains on all financial and non-financial assets will attract a tax rate of 12.5% from 10% earlier. She also announced short term gains on certain financial assets shall
