In order to reduce market fears, Union Finance Minister Arun Jaitley has clarified that there is no intention of government to impose long-term capital gains tax on securities transactions in the upcoming budget. The clarification comes a day after Prime Minister Narendra Modi reportedly dropped a clue on increasing taxes on capital markets and the necessity for all sections, including market players to contribute to the national building through taxes.
Jaitley also said that the speech by government has been misinterpreted by a section of the media which has started speculating that this is an indirect reference to the fact that there could be tax on long-term capital gains. He further said that this clarification is absolutely erroneous as Prime Minister has not made such statement directly or indirectly.
Presently, long-term capital gains on the sale of listed securities are tax free. These are profits on sale of shares on a stock exchange platform after a holding period of one year or more. Profit gained from securities transaction in less than one year is called short-term capital gains, which are taxed at a flat rate of 15% at present. At the same time, all stock market transactions attract securities transaction tax (STT) in a range between 0.017% and 0.125%.