Clarifying the remark on long-term investment involving no effort, which was mislead by a leading daily newspaper, Finance Secretary Hasmukh Adhia on Tuesday said that he was misquoted over his statement on government's rationale.
"Compared to a salaried person or a person who takes risk of having a small/medium unit, he works hard from morning to evening, and he earns real livelihood out of this effort. That effort is more compared to the effort involved in just making passive investment in the equity market. That's all I said. Is that true or not true?," Adhia asked at an event organised by the Chamber of Commerce.
He clarified his intention and added that he had to face extreme criticism for a misleading headline.
"I am saying effort is involved in both. But my point of view was that effort involved in actually doing your job or actually having a unit of your own, the labor involved there is much more, as compared to your investment decision that you take as a passive investor. Unfortunately, the headline was written in a wrong manner. And I find that there is lot of criticism of this. We don't want to undermine the role that the stock exchanges are playing, investors are playing and the brokers are playing in the financial intermediation sector," he said.
The intention was to say that compared to the hard work put in by somebody who is doing a job, the effort involved there is much more. but still in that case somebody is paying 30 percent tax, somebody is paying 20 percent tax. While in case of passive investment you have no tax. That was the idea of comparing the two class of people. Unfortunately, I was misquoted only because of the headline. The headline made all the difference. Nobody reads the inside story. Social media starts attacking you," he added.
Earlier, Adhia, in his interview to the leading daily had explained the government's rationale behind the levy of taxes on LTCG in the Union Budget 2018-19.
"It's not a good idea to have a completely different, and sweet, dispensation for one type of capital gain compared to the others. This tends to skew investment and people prefer an option where there is no tax. The finance minister mentioned Rs 3.67 lakh crore capital gains accrued last year. Suppose this was the salary income of people, it would have been taxed at 20 or 30 percent. This is a gain, which is not accruing from any effort but is just an investment gain. It is only reasonable that we look to get some revenue from this class of income," he had said.
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