Budget 2025: If you execute these 3 tweaks, investing would feel like taking a ride on a rocket ship.
The last time a hike was made on short term and long term capital gains tax, we witnessed stampede selling in the stock market. However, if the government cuts some of the taxes now, then the market will certainly rise too. Finance Minister Nirmala Sitharaman is set to table the next budget of the country – which is budget 2025. We should also expect some largess this time round for the aam aadmi. Special actions could be taken by the government in the field of tax and insurance. The stock market also is optimistic with respect to this budget.
In fact, the discussions on reducing some taxes in the market are because prior to the Union Budget 2025, STT abolition and LTCG tax exemption limit enhancement is what investors are needing. It will alleviate retail investors while foreign investors are selling off their shares.
What is Security Transaction Tax (STT) and how much is it?
In the Union Budget 2024, STT for equity and index traders was lifted from 0.01% to 0.02%.
This tax is charged when purchasing and selling shares and other securities in an Indian stock exchange.This has increased tax burden on investors.
CA Suresh Surana claims that various trade groups have requested the complete elimination of the STT. Their concern is that the change in the LTCG tax from 10% to 12.5% has caused harm to the investors.
What is the rate of long term capital gains tax?
As at now, gains over and above Rs 1.25 Lakhs from the transfer of listed shares and equity mutual funds are subject to LTCG tax.There is no taxation on profits of upto Rs 1.25 Lakhs.Following the revision in budget referenced 2024, information available indicates that the budgeted LTCG tax was set at 12.5%.That said, it is hoped that this time the limit will be set higher, to maybe Rs 2 Lakhs or more.If that happens, the sentiment in the stock market will have a positive outlook and a rise will be witnessed.
expert opinion
As per Rahil Charkha who works with Economic Laws Practice as a partner, there are possibilities where buying and selling of equity shares will not be charged STT in Budget 2025 and the LTCG tax will fall to 10%. Also, Manish Choudhary of Stockbox is buoyant about the opportunities where the government can relieve investors burden by making cuts on STCG, LTCG and STT taxes. It should be noted that in case these three taxes are cut in budget 2025, the willingness of the equity investors to put their money in the stock market looking increased, hence the market will witness moderate growth.
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