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Indexation benefits likely in LTCG tax levy: Sources

Sources said that there is a possibility of indexation benefits as there are no proposals as such and even the amendments under this aspect will be out later next month.

February 06, 2018 / 06:26 PM IST

In a relief to markets, there are likely to be indexation benefits in the Long-Term Capital Gains (LTCG) tax levy, sources told CNBC-TV18.

Post the announcement of a 10 percent levy via LTCG tax in Budget 2018, the markets have been witnessing a continuous bloodbath. The LTCG levy will come into effect from April 1.

Sources said that there is a possibility of indexation benefits as there are no proposals as such and even the amendments under this aspect will be out later next month.

The need for indexation arises only next year. The investors who are holding blue chips for over 20 years will demand an indexation, sources said. There may be a case which can be proposed despite the grandfathering aspect which stands till January 31. The case will also include that the actual LTCG levy rate can come down.

The 'policy perspective' was to abolish the Securities Transaction Tax (STT) after the LTCG was introduced. STT is a tax which is more linked to short term trades than long term and there has been no formal proposal yet on changing the STT regime.  It was an alternative tax mechanism when LTCG was exempt.

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The STT collection for FY19 is budgeted at Rs 11,000 crore. Retaining the STT at zero rate to maintain trail could still be an option.

 
Sapna Das
first published: Feb 6, 2018 04:48 pm
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