Union Minister of Commerce and Industry Piyush Goyal (Photo: PTI)
Piyush Goyal, the union minister for commerce and industry, said on Saturday that the hike in capital gains taxes is unlikely to slow down capital market activity.
Goyal addressed a post-budget discussion organised by the National Stock Exchange at Sydenham College in Mumbai.
“There will be zero impact. For people who are gaining from the stock market, it is a small increase in the tax. I am yet to meet one person who has stopped investing because of the increase in the tax rate,” said Goyal.
The commerce minister termed the criticisms against the hike in capital gains tax and securities transaction tax (STT) in derivatives trading as fear-mongering.
Goyal said the US and some European nations have higher taxation on short-term capital gains through equities.
“India cannot be compared to city-states like Singapore or Hong Kong. We are a country of 1.4 billion people. We cannot ignore taking care of the poor or the common man. When you are looking for wider disbursal of benefits, obviously a few steps are taken to capture increased incomes, and the revenue so earned is well spent,” said Goyal.
Goyal said direct benefit transfer and increasing digitisation have reduced corruption and greatly reduced the pilferage in social benefit schemes.
“In the last 10 years, Rs 34 trillion has been sent to the poor and the lower middle class through bank accounts for different schemes,” Goyal said.
Earlier, addressing an event organised by PL Capital, Goyal said middle-class welfare is not tied to direct taxation.
“Middle-class lives have improved because of the investments in infrastructure, employment-linked incentives, and free housing schemes rolled out by the government. We have many tweaks to simplify the income tax filing,” said Goyal.
The Union Budget has hiked taxes on equities trading in a bid to raise revenue, clamp down on speculative trading, and encourage sticky investments. Effective July 23, the long-term capital gains (LTCG) tax on all asset classes will be 12.5 per cent from the current 10 per cent. Short-term capital gains (STCG) tax has been raised from 20 per cent to 15 per cent. In addition, the government has also raised the securities transaction tax, or STT, on derivatives trading.
First Published: Jul 27 2024 | 9:15 PM IST
