As the final Budget of 2024 draws near, expectations are popping from every nook and corner of the market. While many brokerages foresee a continuation of policy and focus on capital expenditure, market participants are turning jittery over the possibility of a hike in capital gains tax.
While participants are still divided on the cause, capital gains tax continues to stay on the watchlist of several market veterans. Here's what major market veterans expect from the Union Budget 2024, which will be tabled on July 23.
Samir Arora, founder of Helios Capital
In a post on X (formerly Twitter), Arora advised against tightening the capital gains tax regime. He highlighted the case of China, which implies that even a reformist budget may end up disappointing investors if their interests are overlooked.
"Key is to do all reforms without explicitly and implicitly taking the end investors for granted," Arora stated in his post. He believes that stability is crucial and hence warns the government from making abrupt changes to capital gains taxes, terms, or rates, implying that such moves could weaken market sentiment.
Capital gains tax always takes the spotlight in investor circles in the run-up to the budget. Market participants tend to get jittery each year over concerns of a potential hike in capital gains tax—either through an increased tax rate or by extending the holding period from one year to three years.
Raamdeo Agarwal, chairman of Motilal Oswal Financial Services
Raamdeo Agarwal echoes Arora's sentiments on capital gains tax, suggesting that the best budget for the stock markets would be one without any changes. He emphasised that equities are currently balanced well and that taxation should remain unchanged to maintain this equilibrium.
In addition, Agarwal also pitched a bold idea for the government, suggesting it to implement tax exemption for income of up to Rs 12 lakh per annum. "We should encourage consumption by handing more money to tax payers", Raamdeo said.
However, he also stated that the budget should not focus on what the stock markets are expecting. "You cannot build a budget for markets, you have to run it for what is good for the country," he said.
Also Read | No change Budget will be best for markets, tax-exempt income up to Rs 12 lakh, says Raamdeo Agrawal
Vijay Kedia, veteran market investor and MD of Kedia Securities
Taking a contrarian view, Kedia sees a chance of the finance minister tinkering with the capital gains tax in the Budget, even calling it a good time to bring in that change.
"I think some tinkering in the long-term capital gains tax is likely, either on the tax rate, raising from 10 percent to 15 or 20 percent, or on the tenure front, raising from 12 months to 24 months," Kedia said.
Kedia's argument is bolstered by the significant activity in the futures and options segment, which accounts for over 95 percent of the trading volume. He pointed out that "less than 10 percent are long-term investors" in this market, suggesting that changes to the capital gains tax would not adversely affect retail investors.
Read More | F&O frenzy in equities now turning into a stampede, warns Vijay Kedia
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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