Change in tax rules could ruin stock market rally, say experts

Indian equity markets are in good shape and any tinkering with the tax rules, especially those related to long-term capital gains (LTCG) in the upcoming Union Budget could play spoilsport at at time when strong global sentiments towards equity is driving the Indian indices as well.

This was the view put forth by market experts like Shankar Sharma, co-founder and chief global strategist, First Global and Samir Arora, founder and fund manager, Helios while participating in the panel discussion organised as part of The Hindu BusinessLine’s CountDown to Union Budget 2018 event.

The experts were unanimous in their views that if LTCG benefits were tinkered with then it would have a negative impact on the market.

“The government actually stands to lose by introducing LTCG tax in place of STT (securities transaction tax),” said Mr. Arora adding that any revenue generated by LTCG would only accrue after one or two years depending on the government decision.

Mr. Sharma said if there was any shortfall in the government’s overall tax collection, then it should not look at the stock market as an “easy” target.

“Stock market is not the problem.

“Why should you tax the stock market because the collection from other sources has not been up to the mark?,” he asked.

The other panellists included Dinesh Kanabar, founder and chief executive officer, Dhruva Advisors and N. S. Venkatesh, chief executive officer, AMFI, the umbrella body of mutual funds in India.

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Source:The Hindu