The complete share market of India has come to a halt, due to the announcement of Long Term Capital Gain Tax. Last Thursday, finance minister Mr. Arun Jetliey has announced in his budget that, the present Narendra Modi government may apply the Long Term Capital Gain tax. This decision of the present government has left everybody in the Dalal street completely shocked. Due to the recent announcement, the share market of India has become extremely unstable. Because, if this new tax system becomes applicable when all the equity shareholders have to pay the new Long Term Capital Gain tax. The Long Term Capital Gain tax was abolished in India in the year 2005 by the previous government. Now all the investors and share market brokers are worried about this new tax, which will affect them in a very bad way.
Prime Minister On Long Term Capital Gain Tax:
According to the reports of the government officials, every year government fails to collect 50,000 crore rupees due to the absence of Long Term Capital Gain Tax. This loss is huge for the government. This loss of revenue has forced the government to take bold steps like demonetization and Goods and Service Tax reform. Prime Minister Narendra Modi said in a speech that, the low contribution of tax takes place because the present government has a poor tax law. The government must have a better tax law which will make the citizen contribute more in the making of the nation by paying taxes. The government pays enough subsidy for the poor people, but those who are earning their fortune via the stock market, they should also take part in the making of the nation by paying tax properly. The absence of the Long Term Capital tax helps those stock market investors to avoid tax. Prime Minister also added in his speech that, many investors use the gain of from the stock market for the unethical purpose. application of Long Term Benefit Tax will force them to pay tax on their return, which will reduce various illegal activities to a significant level.
The stock market has witnessed a large amount of gain in the last 2 years. The Sensex was at 22,951 in 2016. Now Sense has gained 13000 more points, which show that it has grown 56% in the last 2 years. NIFTY was at 9676 points and it has gained 4000 points in the last 2 years. Which implies that it has gained 57% growth. The present scenario can completely change if the government decides to implement the Long Term Capital Gain tax.
Present Scenario Of The Investors:
Investors keep on moving their fund from one stock to another. The implication of this new tax will reduce their capital because they have to pay more tax on their capital. It will definitely hamper the present situation of the investors. Already the government applies the Securities Transaction tax on every transfer. Implementation of this new tax will make the situation worse for the investor.