{"id":31489,"date":"2018-10-27T14:21:46","date_gmt":"2018-10-27T08:51:46","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=31489"},"modified":"2018-10-27T14:21:46","modified_gmt":"2018-10-27T08:51:46","slug":"for-more-equity-on-long-term-capital-gains-tax","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/for-more-equity-on-long-term-capital-gains-tax\/","title":{"rendered":"For more equity: on long-term capital gains tax\u00a0"},"content":{"rendered":"<p><a href=\"http:\/\/www.thehindu.com\/opinion\/editorial\/for-more-equity\/article22661653.ece\"><b>For more equity: on long-term capital gains tax<\/b><\/a><b>\u00a0<\/b><\/p>\n<p><b>Context:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The Union Budget 2018-19 announced the reintroduction of the long-term capital gains (LTCG) tax for stock market investors.<\/span><\/li>\n<\/ul>\n<p><b>LTCC:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The gains would be computed based on the share price on January 31<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Long-term capital gains exceeding <\/span><span style=\"font-weight: 400;\">\u20b9<\/span><span style=\"font-weight: 400;\">1 lakh would be taxed at 10% without the benefit of indexation.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"> \u00a0<\/span><span style=\"font-weight: 400;\">Indexation refers to adjusting the gains against inflation, which brings down the real quantum of gains<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"> \u00a0<\/span><span style=\"font-weight: 400;\">The Centre has justified the new tax arguing that it helps avoid the erosion of its tax base and levels the playing field between financial assets and investment in manufacturing.<\/span><\/li>\n<\/ul>\n<p><b>Background:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">In 2004-5, as part of its attempts to courage long-term investment in equity shares, the government had abolished LTCG tax replacing it with <\/span><b>securities transaction tax(STT).<\/b><\/li>\n<\/ul>\n<p><b>Rationale behind introduction:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">LTCC would see investors paying 10% tax on the gains made by selling shares even after holding them for more than a year.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"> \u00a0<\/span><span style=\"font-weight: 400;\">Help avoid tax base erosion.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Ensure level playing field b\/w financial assets and investment in manufacturing.<\/span><\/li>\n<\/ul>\n<p><b>Concern areas:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Whether raising the tax burden on equities, rather than lowering the tax and other barriers to investing in alternative assets, is the rig<\/span><span style=\"font-weight: 400;\">ht way to address the distortionary <\/span><span style=\"font-weight: 400;\">effect of taxes.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The smaller differential between short and long-term capital gains tax itself will discourage the long-term holding of stocks in favour of short-term trading activity.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">It is likely to discourage to some extent the growing culture of investing in equities for the long run.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"> \u00a0<\/span><span style=\"font-weight: 400;\">Being the only country in the world to impose both the STT and LTCG, India is also likely to become a little less attractive to foreign investors<\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>For more equity: on long-term capital gains tax\u00a0 Context: The Union Budget 2018-19 announced the reintroduction of the long-term capital gains (LTCG) tax for stock market investors. LTCC: The gains would be computed based on the share price on January 31 Long-term capital gains exceeding \u20b91 lakh would be taxed at 10% without the benefit&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/for-more-equity-on-long-term-capital-gains-tax\/\">Continue reading <span class=\"screen-reader-text\">For more equity: on long-term capital gains tax\u00a0<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[555],"tags":[],"class_list":["post-31489","post","type-post","status-publish","format-standard","hentry","category-test-1","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704809326},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/31489","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=31489"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/31489\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=31489"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=31489"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=31489"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}