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No intention of govt to impose long-term capital gains tax: Arun Jaitley

Press Trust of India
26th Dec 2016
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To assuage market fears, Finance Minister Arun Jaitley today said there is no move to impose long-term capital gains tax on share transactions, an issue investors are hugely touchy about.

Finance Minister Arun Jaitley
Finance Minister Arun Jaitley

The statement came a day after Prime Minister Narendra Modi reportedly dropped a hint on increasing taxes on capital markets and the need for all sections, including market players, to contribute to the national exchequer. Jaitley said on the sidelines of Digi Dhan Mela at New Delhi,

The speech (of the Prime Minister) has been misinterpreted (by a section of the media) that this is an indirect reference to the fact that there could be a long-term capital gains (tax) on security transactions. This interpretation is absolutely erroneous

Currently, long-term capital gains on the sale of listed securities are exempt from taxes. These are profits on sale of shares on a stock exchange platform after a holding period of one year or more. He further said the Prime Minister has made no such statement directly or indirectly.

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 in a section of the media itself, he said.

Yesterday, Modi had said "those who profit from financial markets must make a fair contribution to nation-building through taxes... We should consider methods for increasing it in a fair, efficient and transparent way".

Now it is time to rethink and come up with a good design which is simple and transparent, but also fair and progressive, Modi had said, adding that for various reasons, contribution of tax from those who make money on the markets has been low due to illegal activities and frauds or due to the structure of our tax laws that offer low or zero tax rate on certain types of financial income.


Also readOn Day 43 of demonetisation, FM Jaitley explains how India’s economy will change


Profit gained from share transaction in less than one year is called short-term capital gains, which are taxed at a flat rate of 15 percent at present. At the same time, all stock market transactions attract securities transaction tax (STT) in a range between 0.017 percent and 0.125 percent.

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