The Union Budget will be presented by Finance Minister Nirmala Sitharaman on February 1.Market participants also demanded an improvement in the tax-free exemption limit on long-term capital gains (LTCG) from equity investments to provide more relief to retail and long-term investors.
In its Budget wish list, JM Financial Services has recommended that the government should increase the tax exemption limit for equity LTCG from Rs 1.25 lakh to Rs 2 lakh.
The company also sought to standardize the definition of “long term” to twelve months across all asset classes, including equities, debt, gold and real estate, to reduce complexity and improve tax clarity.
It also called for capital losses to be allowed to be offset against income from other sources. Market participants have also warned of a further increase in transaction-related taxes.
Dhiraj Relli, Managing Director and Chief Executive Officer of HDFC Securities, said stakeholders have proposed keeping the Securities Transaction Tax (STT) on spot equity transactions lower than that on derivatives to encourage long-term investments over speculative trading.
He also proposed taxing only the profit component of share buybacks and bringing dividend tax rates for domestic investors in line with those for non-resident Indians (NRIs).
Tejas Khoday, Chief Executive Officer of FYERS, said the government should refrain from further increasing the STT.
He added that reducing both long-term and short-term capital gains taxes to 10 percent would significantly increase private investor participation.
Khoday also expressed hope that import duties on gold and silver will not be increased further as these assets remain important hedges against stock market volatility and depreciation of the rupee.
Meanwhile, the NSE and BSE will go live trading on Sunday, February 1, when the Union Budget will be presented.
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