In a blow to investors, Finance Minister Nirmala Sitharaman, in her presentation of the Union Budget for FY 2024-25 announced several key tax changes impacting capital gains and trading activities:
Long-Term Capital Gains: The tax rate on long-term capital gains for all financial and non-financial assets will rise from 10% to 12.5%. Additionally, the exemption limit for these gains has been set at ₹1.25 lakh per year.
Short-Term Capital Gains: The tax rate on short-term gains from certain financial assets will increase from 15% to 20%.
Among other announcements that impact the markets, the FM also declared a significant hike in the STT rate was announced, rising from 0.01% to 0.02%. This increase will effectively double the tax burden for equity and index traders involved in Futures and Options (F&O) transactions.
The equity benchmark indices went into a freefall mode as the finance minister Nirmala Sitharaman announced a hike in long term capital gains tax.
She also made changed in the current income tax slab in the new tax regime. Check out here
Presenting the budget, Sitharaman emphasized India’s robust economic growth amidst global uncertainties. “India’s economic growth continues to be the shining exception and will remain so in the years ahead,” she stated. She also noted that while the global economy is performing better than expected, it faces significant policy uncertainties, with downside risks to growth and upside risks to inflation.
The FM listed Nine priorities for this year and coming years. These include Productivity and resilience in Agriculture, Employment and skilling, Inclusive HRD and social justice, Manufacturing and services, Urban development, Energy security, Infra, Innovation and R&D; and Next generation reforms. This focusses on job creation and boosting consumption, potentially benefiting consumer goods, real estate, and auto sectors.
This budget marks the seventh consecutive presentation by Sitharaman and the first in Prime Minister Narendra Modi’s third term. The budget mainly witnessed major tax changes and focused on employment creation.
