Union Budget 2024: How will the stock market respond to capital gains tax changes in the budget?
Union Budget 2024: 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 capital gains tax?
Taxes on profits from the sale of capital assets, such as real estate, buildings, cars, patents, jewelry, 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 do experts say on the matter of capital gains tax in the Union Budget 2024?
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% thought for normative taxation purposes.
Also Read: Union Budget 2024: Key figures to watch in Nirmala Sitharaman’s 7th consecutive budget