Don’t miss the latest developments in business and finance.

Thumbs up to cap gains tax sop

Marketmen dub it the ?one big positive'

Image
Our Markets Bureau Mumbai
Last Updated : Feb 28 2013 | 1:54 PM IST
In a bid to extend the feel-good factor ahead of the ensuing general elections, Union finance minister Jaswant Singh has proposed to extend the long-term capital gains tax (LTCG) regime for another three years.
 
"The regime of listed equities acquired on or after March 1, 2003, being exempt from long-term capital gains tax should be extended for a further period of three years, so as to provide stability," the finance minister said in his interim Budget statement yesterday.
 
The Union Budget 2003 had exempted capital gains arising out of shares in the BSE-500 index, purchased after March 1, 2003, and sold after holding for 12 months or more from payment of capital gains tax.
 
Most brokers had welcomed the government's decision to extend long-term capital gains tax on listed shares for three years.
 
"One big positive is that LTCG has been extended for three years," said Raamdeo Agrawal, managing director, Motilal Oswal Securities.
 
"Those who have invested since April 1, 2003, would have come for profit-booking after March 2004 and fresh investors would be scared to enter the market as the tax rate is high for short-term capital gains. Extension of LTCG for three years will mean the tax-free yield will go up which will substantially drive savings into equities again," said Kishore P Oswal, a leading tax consultant.
 
Hemang Raja, chief executive officer, IL&FS Investsmart, added, "The LTCG exemption for equity shares for three years more should go a long way in developing the equity culture among Indian investors who have traditionally become low-risk investors. Fiscal support for encouraging equity investment is required for achieving high growth plans of the Indian corporate sector."
 
Deena A Mehta, MD, Asit C Mehta Investment Intermediates, called it a positive indicator for investment in the secondary market.
 
"There is hardly anything negative in the interim Budget. The market should therefore digest the same and stabilise in a day or two. Several investors who were waiting for the announcements to book profits have done so. There is no cause of panic."
 
"The exemption from long capital gains announced last year has now been extended to a period of three years should spell good news for equity investors. This move will help in encouraging long-term participation into equities," said a fund manager with a mutual fund.

 
 

Also Read

First Published: Feb 04 2004 | 12:00 AM IST

Next Story