When it is tough to believe anyone, people start acting on rumors or "misinterpretation" or whatever you want to call it. Long-term capital gains tax for the stocks investment in India is zero-nada-zilch. It means, if you buy some shares of xyz company and hold it for more than a year - 365 days - then when you sell that stock for profit, you don't have to pay anything as capital gains tax! Why? Go figure! Ok let's make this clear that we are not of the opinion that the tax shouldn't be zero or whatever but the point we want to make is about trading related.
If you stir the hornet's nest and still expect calmness then it's too much of wishful thinking. While Indian stock market is plagued with lots of bogus trading activity from Dabba Trading ( aka bucket shops ) to blatant stock price manipulation, nobody has dared to touch this super-rich's privileged arena of frauds by hinting to impose any tax or penalizing it in any other way. One reason for that is that the lawmakers themselves have been utilizing this totally legal practice for alchemy - i.e. converting stash of cash into stock and then into 'white' money !
So what if capital gains tax increases?
Currently this government is on totalitarian track where it wants to grab it all and such tax may not be ruled out completely in future. If that happens then one would simply argue that market will crash. But here you need little pragmatism and patience before jumping onto the conclusions. Yes, there may be short-term knee-jerk sell off but we don't think that it can keep the market rolling over sustainably. Because big corporations and those ultra-rich who are exploiting the stock market are not going to be concerned about 10% tax ( even if government start implementing the capital gains tax, it is not going to be more than 10 % in the beginning ) that much, since they have 10 different tricks to avoid the higher tax.
Foreign Direct Investment ( FDI ) may not suffer that much because they already have different tax domain anyway.
So if it is only about capital gains tax then it won't make much difference in market but right now there are bigger things into the play e.g. Botched Demonetization, US interest rate hike, Global political shift towards hardliner protectionist leaders etc. and that will cause Indian market to correct lower. We are still waiting for our 7750 and 7500 support levels in NIFTY first.
If you stir the hornet's nest and still expect calmness then it's too much of wishful thinking. While Indian stock market is plagued with lots of bogus trading activity from Dabba Trading ( aka bucket shops ) to blatant stock price manipulation, nobody has dared to touch this super-rich's privileged arena of frauds by hinting to impose any tax or penalizing it in any other way. One reason for that is that the lawmakers themselves have been utilizing this totally legal practice for alchemy - i.e. converting stash of cash into stock and then into 'white' money !
So what if capital gains tax increases?
Currently this government is on totalitarian track where it wants to grab it all and such tax may not be ruled out completely in future. If that happens then one would simply argue that market will crash. But here you need little pragmatism and patience before jumping onto the conclusions. Yes, there may be short-term knee-jerk sell off but we don't think that it can keep the market rolling over sustainably. Because big corporations and those ultra-rich who are exploiting the stock market are not going to be concerned about 10% tax ( even if government start implementing the capital gains tax, it is not going to be more than 10 % in the beginning ) that much, since they have 10 different tricks to avoid the higher tax.
Foreign Direct Investment ( FDI ) may not suffer that much because they already have different tax domain anyway.
So if it is only about capital gains tax then it won't make much difference in market but right now there are bigger things into the play e.g. Botched Demonetization, US interest rate hike, Global political shift towards hardliner protectionist leaders etc. and that will cause Indian market to correct lower. We are still waiting for our 7750 and 7500 support levels in NIFTY first.
