Facing criticism for not removing the long term capital gains (LTCG) tax, Finance Minister Nirmala Sitharaman said that the ministry would wait for one more year to take a call on it. The ongoing share market volatility has not allowed the ministry to make a reasonable estimate on the same, news agency PTI reported Nirmala Sitharaman as saying. “The reason why we didn’t go that far on LTCG is because let us have an assessment at least one-year of a normal response to a tax. Let us hope this year, after which we would take up a considered view,” Nirmala Sitharaman also said at an event last Thursday. The LTCG tax was introduced in budget 2018 by the government. Sharing his views at the same event, Revenue Secretary Ajay Bhushan Pandey said that the government’s view is that every type of income needs to be taxed, and not imposing a tax on a particular stream such as LTCG may lead to arbitrage opportunities.
The share market plunged 1000 points on the budget day on account of disappointment after the government didn’t take any action on LTCG and the shift on dividend distribution tax (DDT). On DDT, Nirmala Sitharaman said that the liability was shifted to the investor’s applicable rate from the company to reduce the outgo from the middle-class investors.
Meanwhile, Nirmala Sitharaman announced fresh measures to aid the economy to come out of a sustained slowdown. The Indian economy is seeing a slowdown on account of both domestic and global factors. The government took some measures ahead of the budget to propel the slowing economy. According to the first advance estimates by the government, the GDP is expected to grow around 5 per cent in FY20.
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