Nirmala Sitharaman, the Finance Minister of India, on July 23, introduced the Union Budget 2024 in the parliament with significant changes aimed at creating a balanced and equitable economic landscape.
One of the major highlight of this year budget which she hailed as "futuristic" in an interview is about the revised tax regime for the long-term capital gains (LTCG). During the budget presentation, Sitharaman announced a uniform LTCG tax rate of Rs 12.5 per cent for all asset classes, both for residents and non-residents.
Sitharaman during a recent industrial interaction organised by the RP Sanjiv Goenka group in partnership with CNBC-TV18, said, "Taxes have not been increased because I want more money… The decision is based on the idea that every asset class has to be treated similarly.
"For ease of doing business, for simplification and for rationalisation we have increased taxes and not for revenue consideration or because I want more money," she added.
Removal of Indexation Benefit on Real Estate
The removal of the indexation benefit for real estate in the budget has also sparked several criticism among investors and opposition parties.
Responding to this, the Finance minister told CNBCTV18, "I will hear all comments and suggestions with respect to tax changes but the Finance Bill now rests with Parliament. I can’t comment on it outside."
Impact on the Stock Market
The stock market reacted immediately to the announcement of higher taxes on capital gains. On the budget day, the BSE Sensex dropped 1.6 per cent during the trading hours although it recovered later to close flat.
The key factors influencing the market reactions were the increase in short-term capital gain tax to 20 per cent from 15 per cent on equities and equity-linked mutual funds, along with the hike in LTCG tax rate to 12.5 per cent from 10 per cent.
