Synopsis "Logically speaking, given that markets have also become normal, given the context that there is talk of global recession and we need very healthy capital markets, it should not get distorted. Having said this, if the time frame changes and for LTCG tax, long term goes from one year to two years, I do not see a meaningful impact on the markets. " ETMarkets. com Related Sceptical about PLI scheme; time to reverse customs duty hike: Arvind Panagariya Why LTCG and NPS taxation need a relook this Budget: Alok Agarwal Sandeep Tandon on Adani effect on market and Budget impact INSIGHTS Read Stock Insights by ET for a quick analysis NSE BSE Madhusudan Industries Ltd. PEER COMPANIES Explore Now “Any meaningful distortion on the capital gains tax regime may not get a significant revenue boost up and it is not even needed if they get Rs 10,000 crore extra. This thing can wait and it should wait. There is merit in rationalizing the taxes but should it be done this year? That is my point,” says market expert Madhusudan Kela . The government also is no longer doing a lot of wasteful expenditure of government tax collection in the form of subsidies or any other thing. kind of expenditure which is not creating wasteful effects so the multiplier is very large? Exactly. This number used to be 10 or 12%, the capital expenditure number of the overall expenditure used to be 10 or 12% now it has inched up to 19 or 20% and that is what is getting reflected in the confidence of people when it comes to all the infrastructure projects being implemented and we are seeing it all around us. Every time when the Budget is round the corner, we tend to discuss the importance of rationalization of taxes in India. We have different tenure and different tax rates. Different tenure depending on your holding in equity, debt, real estate and gold. Market nervousness is valid. The short term rates in India are 15% and long term is 10%. If the short term rate is changed in proportion with business income, will that be negative news for the market? Let us first look at it from the finance minister’s situation. Capital markets have enabled raising of Rs 6. 5 lakh crore of equity in the last 3 years. I would urge and pray that these things are not disturbed at least this year because everything is going well. The capital market is helping revive the economy given the global context. Read Also: If 20% of total expenditure is capex, it will be a big boost for a lot of sectors Budget 2023 Tax cuts, factory incentives: What to watch for. . . Pre-Budget: Jobs remain elusive, quality jobs e. . . India government to stay fiscally prudent for m. . . India need not worry about faltering growth, sa. . . MoS Finance Chaudhary says focus on overall eco. . . Economic Survey: India aims for electronics man. . . Economic Survey hints at what will bring back a. . . India’s support for infra creation will steer t. . . Services sector grew at 8. 4% in FY22: Economic . . . Economic Survey: Reforms to enable speedy 5G ro. . . Credit growth likely to be brisk in FY24 if inf. . . Why Economic Survey 2022-23 is so upbeat about . . . 1 2 3 4 5 6 7 8 9 10 11 12 Any meaningful distortion on the capital gains tax regime may not get a significant revenue boost up and it is not even needed if they get Rs 10,000 crore extra. This thing can wait and it should wait. There is merit in rationalizing the taxes but should it be done this year? That is my point. MORE STORIES FOR YOU ✕ Sceptical about PLI scheme; time to reverse customs duty hike: Arvind Panagariya Why LTCG and NPS taxation need a relook this Budget: Alok Agarwal Sandeep Tandon on Adani effect on market and Budget impact « Back to recommendation stories I don't want to see these stories because They are not relevant to me They disrupt the reading flow Others SUBMIT Logically speaking, given that markets have also become normal, given the context that there is talk of global recession and we need very healthy capital markets, it should not get distorted. Having said this, if the time frame changes and long term goes from one year to two years, I do not see a meaningful impact on the markets. But if you change the short term capital gains to business income. It is if you club it with the business income slab then I see a very meaningful impact on the markets. So, you are making a point that there is need to have versus good to have. Now, one can argue that in the short term, capital gains should be changed but that is good hygiene as per global standard. But the need to have is clearly not there, given the global backdrop. Tthere is no desperate need to raise taxes and this does not tally with the with the Prime Minister's vision of financial inclusion because the SIP culture in India is just about picking up. We have lived with it. We have lived with it for the last 50 years. In one year, nothing is going to change. But this year is very crucial for India for us to be able to differentiate from the world and take the leap forward. I expect and I am sure the government will recognize it more than what you and I can discuss that this year, the economy, the people need support and they need growth push so they will optically utilize this Rs 2. 5 lakh crore buffer and make sure that the sentiment remains very positive. I feel there will not be very large tinkering on at least on the short term capital gains tax And just to supplement that point, from CY2020 to CY2022, we have seen record outflows by FIIs but record flows from SIP investors. Does the equity domestic wheel which is chugging needs to be protected? There is also a significant risk which people take as markets are very volatile. Obviously there has to be some incentive for people to be able to take this volatility and we are paying taxes. We are paying STT which is a very major tax from our capital market perspective and whatever income I have, I end up paying 18% GST . On the whole, I am actually paying a lot of taxes. And there is tax on dividend also Exactly, tax on dividend also that is right. Is the importance of Budget over the years getting diluted? We looked at some data and it seems to be indicating that on the day of the Budget, maybe a day before or a day after, markets will have their own volatility. But on a 15 -day that is how the data has been over the years. The budget volatility has come crashing down. Would you agree with it? No doubt about it. 10 years ago, all the taxation used to change, customs duties were changing. A lot of things were changing and it was impacting a lot of sectors. Now because of the introduction of GST, a lot of data got simplified. Whatever changes were supposed to have been brought in, larger taxation whether direct or indirect are all in place. We are not even discussing if there is going to be a change in corporate taxation because it is assumed that all of those changes over the years are being done. There is not that much market excitement vis-à-vis Budget except to see that we are actually walking the talk and we are in the right direction. Don’t miss out on ET Prime stories! Get your daily dose of business updates on WhatsApp. click here! Tuesday, 31 Jan, 2023 Experience Your Economic Times Newspaper, The Digital Way! 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