LTCG tax relief in Union Budget? D-Street is hoping against hope

MUMBAI: Market participants hope for some relief on long-term capital gains (LTCG) tax on securities in the full Union Budget that FinanceNSE 1.08 % Minister Nirmala Sitharaman is going to unveil on July 5.

This can help boost capital markets, which have turned lacklustre since January 2018 amid multiple domestic and global headwinds.

Industry leaders hope Sitharaman will remove the LTCG tax completely, or cut the rate. Some others, however, speculate that the exemption limit could be hiked to Rs 2,00,000 from Rs 1,00,000 earlier.

He, however, believes the Finance Minister may not do away with it completely. “It was counter-productive. Reversing it will confirm the government was wrong in introducing it, and it may not want to do that,” he said.

“I don’t think they will do away with it. It was introduced just last year. If it is reversed, what was the purpose of bringing it in last year? Due to the grandfathering clause, it isn’t going to make any difference from tax perspective,” he said.

Punit Shah, partner at Dhruva Advisors, hopes the government would take a relook at the LTCG tax on listed shares and remove it completely.

“There is no official data as to how much the government is making out of these taxes. To my mind, it would not be significant,” Shah said.

Former Finance minister Arun Jaitley re-introduced LTCG tax on gains arising from the transfer of listed equity shares exceeding Rs 1,00,000 at 10 per cent, without allowing any indexation benefit. Howe ..