Budget 2024: Stock Market Reacts to Capital Gains Tax: One major worry is how the markets would respond to Finance Minister Nirmala Sitharaman’s expected presentation of the Union Budget 2024 on July 23.
Capital gains tax is a crucial element, and any changes to it could have a big impact on the market.
What is the tax on capital gains?
Taxes on profits from the sale of capital assets, such as real estate, buildings, cars, patents, jewels, and so forth, are known as capital gains taxes. By extension, shares fall under this criteria.
For this reason, if the government decides to lower the capital gains tax or vice versa, the markets may experience a possible surge.
What opinions do professionals have regarding the Union Budget 2024’s proposed capital gains tax?
In his weekly report titled GREED & Fear, Chris Wood, global head of equity strategy at Jefferies, predicted that the government would raise the capital gains tax.
“There is increasing evidence of retail speculating, especially in the options market where India offers options for individual equities, which is why such ideas appear to be under consideration. Modi and the BJP are unlikely to see such paper speculation as constructive. The Indian Prime Minister is naturally suspicious of people who make money out of money, especially in a zero-sum game like options, which is probably a valid assumption, according to GREED & FEAR, the author stated.
But he also thinks that because the government is now in a coalition, it is less likely to raise taxes greatly. If the tax is raised sufficiently, though, he predicts a huge market downturn.
According to a report by EY, the Union Budget 2024 is anticipated to have a streamlined capital gains tax system with respect to rates and computation techniques. The report also suggested that transferring unlisted shares should be given at least 10% consideration for normative taxation purposes.
