Long-term capital tax: grandparenting a welcome idea, analysts say

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Most market participants said the introduction of the long-term capital gains tax was as expected. However, they welcomed the grandfathering provision and felt that it would act as a calming factor.

Partho Dasgupta, Tax and Regulatory Services Partner, BDO India, said: The grandfather provision of imposing long-term capital gains tax with Jan 31, 2018 as a cut-off date would be a relief, with market prices reaching an all-time high for the tax exemption. real gains accruing to investors in the future.

According to G Pradeepkumar, CEO, Union Asset Management Company, the decision to levy LTCG on equity at the 10 percent rate is not surprising and is unlikely to have a significant negative impact on the markets.

“This still maintains equities as the most attractive asset class from a tax point of view since the holding period to be eligible for LTCG on most other asset classes is three years. Gains made through January 31, 2018 will be grandfathered indicates the government has given careful thought to the proposal. “

Kamlesh Rao, Managing Director and CEO of Kotak Securities, said: LTCG’s rationalization as expected has arrived, albeit negative on sentiment, but robust stock returns will absorb that 10 percent if corporate earnings growth occurs as expected.

“In the longer term, I think the taxation of capital gains is healthy for the overall economy. Needless to say there will be a knee-jerk reaction to this in the market, but I guess it would be likely to short term, “mentioned Nithin Kamath, Founder and CEO of Zerodha.

Jayant Manglik, President of Religare Broking, believes that: Apart from an instinctive reaction, the equity market will not be impacted in the medium and long term because it remains the only real investment opportunity available.

“FII investments can be affected in the short term, as the issue of tax compliance arises, which increases operating costs. Likewise, mutual funds can have a brief impact, but vested interests up to January 31 are helpful. The real disappointment was STT’s continuation with LTCG, logically only one should be there. But not all are convinced.

Milind Kothari, Managing Partner, BDO India, said: “The much anticipated introduction of LTCG is now back with a new avatar. As we know from tax law, this could only get worse over time, with each successive budget diluting the initial commitment to tax. long-term gains. ”

Monish Panda, Founder, Monish Panda & Associates, said: This move was expected. The introduction of LTCG will lead to a drop in Sensex at least in the short term. Most investors will try to account for their profits made during the recent bull run and escape the LTCG tax that will be imposed after January 31, 2018.


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