Capital Markets Pin Hopes on Upcoming Budget, Seek Tax Reductions

Capital market participants have urged Union Finance Minister Nirmala Sitharaman to give due consideration to their demands in the forthcoming Union Budget. They have called for tax reforms aimed at encouraging retail investors and promoting long-term investments.

Specifically, they have proposed reducing the Long-Term Capital Gains Tax (LTCG) from the current 12.5% to 10% and the Short-Term Capital Gains Tax (STCG) from 20% to 10%. In addition, JM Financial Services has suggested increasing the annual LTCG exemption limit from the existing ₹1.25 lakh to ₹2 lakh.

Other key demands include: 

Avoid any further increase in Securities Transaction Tax (STT). 

Do not impose additional tax burdens on gold and silver. 

Apply a uniform 12-month holding period to qualify for long-term capital gains across asset classes such as equities, real estate, debt and gold. 

Allow losses incurred in one asset class to be set off against gains from the sale of other assets.

Levy a lower STT on cash equity transactions compared to derivatives. 

Tax only the gains arising from share buybacks, rather than the entire transaction amount.