LTCG @ 10% Budget 2018 FY19


(Hashims) #121

Hi,
Might be a naive question but as i’m not aware of how Income tax dept categorize or define “trading” ? What is the metric here to classify this ?
Suppose someone buy a stock of a company as an opportunistic bet or undervalued, once its fair value reaches, decided to sell, in less than a week/ or after a week/ month or so…does this considered as trading not a STCG category? and attracts different rate of Income tax on profits? and how much it would be?


(abhishkjain2626) #122

Sir, where is the mention of 31st March 2018 thing in the Budget speech? If one’s shares are already in LTCG,
they will have to pay 10% on the difference between 31st Jan 2018 High price and selling price ( of course assuming SP is higher than 31Jan’s high) regardless of when you sell? Or is it tax-exempt if sold before 31 March (again assuming SP is higher than 31Jan’s high?


(g1) #123

Tax cycle is april to March end. So the budget will come into effect from next financial year. So the March 31 date is being written everywhere

G1


#124

Those who are supporting this move have only one arguement that if you are making too much money it ought to be taxed and not painful. I think this is a flawed arguement. If this is the thinking of the govt. too, it needs to be taxed at the hands of folks making that easy money. Now think about this way - equity is not just another asset class. Folks take huge risks and often no return for years to make some money. Boom! it will get taxed in one year of profit booking without idexation. They think this is overvalued but it has also gone years without giving any return. Govt. thinks that it is easy money which is not the case. This is a mechanism to provide capital to the real economy and now I will demand more valuation comfort for my return which in turn raises cost of capital for some. This is the last thing should be in govt’s plans as we have very high real interest rates as well. IMO, the situation is like this - in an urge to catch the mouse they are burning the house. Just think about people who are fully dependent on market for their monthly cash flows. They will get taxed from 1 lakh upwards while an employee will remain untaxed upto 3-4 lakh. This is a direct dicouragement for many.


(nayan solanki) #125

Market will be back on track after some corrections as valuations are high may government rethink of reducing tax on ltcg if crude and GST revenue support . GST will bring big benefit in year’s to come with standard GST rates


#126

it is all hope that GST will bring benefits. As far as my discussion with some bizman suggests that many have found ways to avoid GST. The problem lies in non-matching of invoices. Delay of e-way bill is another loophole and see below. Govt. is clear that revenue shortfall has to be met by some new measures.


(maheshkumar) #127

LTCG is applicable all over the world ,so why should we be exempted

I am very happy that it’s just 10% and not 20 % or not according to tax bracket

Else market would have crashed like anything

So market will realise this sooner or later


#128

This argument is not valid. There are many countries where inheritance tax is applicable. Should we start paying that as well.


(maheshkumar) #129

It’s already in the pipeline


#130

very wrong to say that it is 10% not 20% since higher rates are coming anyway. The budget fine print suggests that they will go for parity with CG on property transactions. Now you have mitigating factor that you could reinvest and defer the payment of taxes after selling property. There is no mitigating factor here - you have to pay without indexation benefits along with STT. 2nd it is very wrong to compare India with other first world countries. They have excess capital and lack of opportunity in their domestic economies so they can afford to tax the same. We are a capital deficient country with high rates of interest. This move is ill-advised and wrongly timed. Many experts coming on TV channels have vested interests to sing the song. Make no mistake that I am among the vocal supporters of the govt. on other matters. This left turn by the govt. to milk the well-off and fund a costly idea of Modicare which has failed miserably in US too will waterloo in 2019.


(Gaurav Agarwal) #131

LTCG-1

Argument that

exempted capital gains for listed shares and unit is around 3,67,000 crores as per return filed for AY 17-18. Major part of this gain has accrued to corporates & LLPs.

I wish to remind that in case of companies & LLP if they go for LTCG they have to pay MAT which is around 20%.

With introduction of 10% LTCG companies will pay 10% LTCG and an additional 20% MAT so effective tax will be 30% + Cess.


(rahulshares) #132

They should change the MAT provisions accordingly to avoid double payment of taxes.


(Roy) #133

This is not true. LTCG tax exists (mostly) only in developed countries. In developed countries, if you suddenly lose your job, you get social security benefits. In countries where there is no social security, it is critical for people to save for a rainy day.

The government should encourage people to invest in equities by providing tax incentives. Imposing a tax on capital gains without providing indexation benefit is akin to taxing inflation. Further STT, which was originally introduced in lieu of LTCG tax, has NOT been removed. Corporate tax, dividend distribution tax, tax on dividends, compulosry CSR spend of 2%, STT and capital gains tax; the same profit being taxed so many times is very unfair in my opinion.

If investors do not voice their objection strongly, Government will continue increasing tax rates and may come up with more new taxes in future.


#134

In my view, there is only one way to raise objections meaningfully and investor community is still too small and fragmented to make much difference.


(BGattu) #136

But LTCG aside, I think surplus money in the hands of rural India through 150% MSP and future health care would be best for economic recovery and earnings growth. Beneficial for the affordable housing, consumer discretionary and all the cyclicals. Considering the possible growth, equities are the best investment option for next few years. The government also aligned it’s interest with the market through LTCG which must support its future growth to collect the tax because the LTC losses would be uses to offset the taxes to be paid.


(madhavikkutti) #137

In spite of the bloodbath in the stock market yesterday, one interesting data which I see is that FII’s have still purchased for a net amount of Rs. 950 crores yesterday.

http://www.moneycontrol.com/stocks/marketstats/fii_dii_activity/index.php?classic=true


(Mahendra243) #138

Yes Madhavi…but who sold then?..even DLL’s sold less -508 so who sold here then? retailers?HNI or PMS?
I think FLL might have sold nifty options or so…


#139

The valuation of SOTP (Sum of the parts),strategic stake and holding company will be adversely effected.

For example a SOTP valuation of ICICI Bank comes up with 110 Rs for it’s subsidiaries. So a 10% tax will lead to a 10 rs drop in valuation.
Most of ICICI’s subsidiaries are related to insurance/mutual fund/capital market that is dependent on fresh inflows and that is linked on ability to generate post tax returns for it’s customers.


(manivannan.g) #141

Completely agree !! They just wanted to showcase that “they took action against black money, by doing demonetization.” And they wanted to get the credit for implementing the GST. Both got horribly wrong. In fact, with the implementation of GST, every one hiked the price in everything stating/blaming the GST. But GST suppose to be an awesome reform, but screwed it altogether.

Now Mr. Adhia thinks investment in Gold kind of assets are equal to investments in stocks. A commerce student can brief how stock investments helps the economy, creating jobs than just buying other asset class (gold, real estate).

I seriously feel that something wrong with the whole Finance ministry !! What an irresponsible and apathetic statements these guys are throwing on the people.


(Bhaskar Jain) #142

I think something like what happened with EPF taxation will happen in this case also. Market reaction will force them to atleast allow indexation/offset loss, stt paid etc

http://www.moneylife.in/article/how-the-government-flip-flopped-on-taxing-epf/45713.html