LTCG tax: No decision to withdraw yet despite demand, says government

Income Tax, Income Tax queries, LTCG tax, commercial office property, Transfer of Property Act The government has not taken any decision yet on the representations demanding the withdrawal of Long Term Capital Gain (LTCG) tax. (Image: Reuters)

The government has not taken any decision yet on the representations demanding the withdrawal of Long Term Capital Gain (LTCG) tax announced in the Budget 2018. Answering the question whether the government is considering to reduce LTCG tax, MoS Finance Shive Pratap Shukla said, “The decision will be reflected in the official amendment, if any, to the Finance Bill 2018, at the time of consideration and passing by the Parliament.”

The question was asked by DMK Rajya Sabha member Kanimozhi in the “light of falling stock market in India”. Finance Minister Arun Jaitley in the Budget 2018 introduced 10% LTCG tax on on profits made on equities exceeding Rs 1 lakh without allowing the benefit of indexation. The gains made until January 31 was grandfathered.

The announcement of re-introduction of LTCG tax spooked fears among the investors and became one of the triggers in the stock market bloodbath, mainly led by global sell-off, in following days. Since then, many stakeholders have been demanding its withdrawal.

The government, for now, has declined any rethink on its withdrawal. While the government strongly advocated for the introduction of the LTCG tax, PMEAC member Surjit Bhalla last month had said that it was leading to a negative sentiment in the stock markets.

He said that the LTCG Tax on equities did not fit the revenue maximisation bill and the tax revenues were way outlandish. However, Goldman Sachs’ Timothy Moe in an interview on Monday ruled out any negative impact of LTCG on the domestic equity inflows. He said that the re-introduction of the LTCG may not “hamper domestic equity inflows much”.

He said that despite tax concerns, India’s domestic equity inflows may remain strong. The 12-month target for Nifty will be at 11,600, the global brokerage maintained.

Source: Financial Express