As equity markets continue their downward slide, there is growing pressure on the government to step in with measures to stabilise investor sentiment. However, Moneycontrol reported its sources as stating that no immediate interventions are being planned.
“We expect the markets to recover in six weeks or so and any tax-related changes would have already been announced in the budget,” Moneycontrol quoted a source as saying. The government believes that the market correction is driven by global uncertainties and is an adjustment from previously overvalued levels rather than domestic taxation policies, the report said.
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The report further stated that there have been renewed calls to reduce or scrap the securities transaction tax (STT). It is a tax imposed on securities transactions through recognised stock exchanges. The Moneycontrol report further quoted the source as saying that reducing or scrapping it is not a priority currently as it is already low. Similarly, regarding LTCG, the government maintains that forgoing revenue is not an option, especially when capital gains taxation is not the root cause of the market downturn.
Currently, a 0.1% STT is levied on equity share purchases, while long-term capital gains are taxed at a uniform rate of 12.5% across all asset classes. Despite market concerns, the government remains firm in its approach, opting to monitor the situation rather than introduce immediate relief measures.
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