Capital Gains Tax: Why fix something that ain’t broke .

The first full budget of the third term of the BJP government and the first of the coalition government is the subject of much debate already. There are various wishlists that industry bodies, corporates and individuals have prepared and are keenly looking at the fine print at the incoming budget. While it is a full budget, as opposed to an interim budget going into the elections in February, it will also be pertinent to note that in view of only a part of the year now being covered the government may decide to keep the policy oriented and major announcements for next February.

Having said that, certain headlines point to some very sensitive issues especially connected to the capital markets, that have grabbed attention lately. While much of the speculation should rightfully border around the overall growth orientation, revenue maximisation and social equity addressed in the budget as main thrusts, the more controversial issue is the one relating to capital gains tax. There is speculation that there may be a change in the rate, or the holding period to determine short or long term for investments in equity and equity related instruments. Such a change if enacted may have an outsized impact on the market as sentiment in the short term is more impactful than the actual outcome.

Read More -Money Control

Credit - Money Control