Indian markets fell on Tuesday after Finance Minister Nirmala Sitharaman announced an increase in capital gains tax for financial assets in the budget speech.
What Happened: Sitharaman increased the short-term capital gains tax to 20% for certain financial assets. Short-term capital gains tax is applicable when an investor sells equity shares within 12 months of a purchase. The short-term capital gains were hiked from 15% earlier.
The long-term capital gains tax was also hiked to 12.5% from the earlier 10%. Equities listed for more than one year are taxed under long-term capital gains. The government also increased the exemption for long-term capital gains tax to ₹1.25 lakh per year.
See Also: Nirmala Sitharaman Announces Host of Financial Measures For Bihar, Andhra Pradesh In Budget 2024
Additionally, the finance minister also hiked securities transaction tax on futures and options transactions to 0.02% and 0.01% respectively. Buyback of shares will be taxed at the hands of the recipient
While the taxes on investors increased, the corporate tax rate on foreign companies was reduced from 40% to 35% and the angel tax was abolished.
Price Action: Markets were in the red after the announcements came. Benchmark index Sensex and Nifty fell 0.79% and 1.19% respectively. Sensex was trading at 79,866.37 while Nifty 50 was at 24,217.70.
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