No Proposal to impose Capital Gains Tax - FM
INAUGURATING the National Institute of Securities Markets campus at Patalganga on 24.12.2016, the Prime Minister said,
Those who profit from financial markets must make a fair contribution to nation-building through taxes. For various reasons, the contribution of tax from those who make money on the markets has been low. To some extent, it may be due to illegal activities and fraud. To stop this, SEBI has to be extremely vigilant. To some extent, the low contribution of taxes may also be due to the structure of our tax laws. Low or zero tax rate is given to certain types of financial income. I call upon you to think about the contribution of market participants to the exchequer. We should consider methods for increasing it in a fair, efficient and transparent way. Earlier, there was a feeling that some investors were getting an unfair deal by using certain tax treaties. As you know, those treaties have been amended by this government. Now it is time to re-think and come up with a good design which is simple and transparent, but also fair and progressive .
Finance Minister Arun Jaitley was present at the meeting.
The media interpreted the PM's remarks as an indication that the government proposes to impose long term capital gains tax in the ensuing budget.
The Economic Times headlined, PM Narendra Modi hints at long term capital gains tax in budget. The Paper commented, "This could be an indication that the government might be considering a revival of the long term capital gains tax."
The banner headline in the Times of India was, Prime Minister Narendra Modi hints at higher taxes on income from stock market and the paper commented, "Coming from the PM a little over a month before the Budget, financial sector players feel tax on long-term capital gains may be imposed. The remark assumes added significance since finance minister Arun Jaitley and his deputy, Arjun Meghwal, were present at the (meeting)."
Finance Minister Arun Jaitley assured that there was no such proposal and the PM did not make any such remarks. The FM said,
The speech has been misinterpreted in some sections of the media which have started speculating that this is an indirect reference to the fact that there could be long-term capital gains tax on securities transactions.
Now, this interpretation is absolutely erroneous, the Prime Minister has made no such statement directly or indirectly... and therefore I wish to absolutely clarify that there is no occasion or opportunity for anybody to reach such a conclusion because this is not what the Prime Minister said, nor is the intention of the government as has been reported.
Let us wait for the budget to know what really will happen or see today's stock market to know what the pundits think will happen.