Union Budget 2023 Will Finance Minister Hike LTCG Tax On Equities Or Roll Red Carpet For Small Investors Investing In Stocks Income Tax 2023

Budget 2023: In the year 2022, after Russia’s attack on Ukraine, there was upheaval in the stock markets around the world. Be it America or Europe or Asian countries, there was a huge decline everywhere. Due to which the investors have suffered huge losses. The Indian stock market was the only one among the major markets which gave positive returns to the investors and the credit goes to the retail investors. The Indian stock market is now running on the strength of retail investors. In such a situation, the stock market is eyeing the general budget to be presented on February 1, 2023. Finance Minister Nirmala Sitharaman takes steps to encourage retail investors to invest in the stock market or decides to impose higher tax on investors’ earnings from the stock market.

Will there be relief in capital gains tax?

Talking to the investors of the market, most want to see a change in the rules of short term and capital gains tax on the profits of the stock market. Market investors want that the short term capital gains tax on stock market should be reduced to 10 per cent from the present 15 per cent. So the holding period for long term capital gains tax should be increased from one year to 2 to 3 years as is the case for other asset classes.

At present, if an investor sells any stock within a year of buying it after making a profit, then the investor has to pay 15% short-term capital gains tax on the profit. But if an investor sells the stock after making a profit after holding it for a year, then he has to pay long-term capital gains tax at the rate of 10% on the amount of profit, although this tax is levied on profits of more than Rs 1 lakh per annum. Seems like. Investors demand that short term capital gains tax should be reduced from 15 to 10 percent. So the holding period of one year should be increased to 2 or 3 years to collect 10% long term capital gain tax. By doing this, more and more investors will be attracted to invest in the stock market. Which will benefit the Indian markets.

Increased strength of retail investors in the stock market

Since the Corona period, there has been a tremendous increase in the participation of retail investors in the Indian stock market. Before March 2020, there were less than 4 crore demat account holders in the country, which has now increased to close to 11 crore. In the last one year, 3.30 crore people have opened demat accounts. In 2022, foreign investors had pulled out their investment of around Rs 2 lakh from the Indian market after a sharp jump in commodity prices and rising inflation following the Russo-Ukraine war. Due to this, the Indian markets also declined, but retail investors saved the market from the big fall due to the selling of foreign investors. As a result, in 2022, the Indian stock market reached a historical record level. It is a different matter that foreign investors are again turning to the Indian market.

Growing trust in SIP of mutual funds

Investors who do not want to invest directly in the stock market are investing in the market through Systematic Investment Plan (SIP) through mutual funds. According to statistics, record investments are being made through Systematic Investment Plan (SIP). SIP investment is coming in more than Rs 13,000 crore for three consecutive months. Making SIP investment above Rs 12,000 crore since May 2022. The stock market has got support from the huge investment of small investors in mutual funds. But if the Finance Minister increases the tax on the income from the stock market, then it can cause a big blow to the market.

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