Market will absorb tax hikes, key is if Budget can stimulate growth, says Edelweiss's Rashesh Shah

Rashesh Shah, Chairman, Edelweiss Group

Introducing a buyback tax for shareholders is necessary for balancing tax treatment between dividends and buybacks, Rashesh Shah, Chairman of the Edelweiss Group said in an interaction with Moneycontrol.

Historically, dividends were tax-free while buybacks were taxed, creating an imbalance.

He believes the market will absorb the minor tax increase, as well the hike in long-term capital gains tax and short term capital gains tax.

The more pressing issue, according to Shah, is whether the budget can stimulate growth. "I personally think to get growth, private capex and interest rates will have to come down," he said.

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Private CapEx and Economic Growth

Shah flagged private capex as an area of concern. He pointed out that despite an increase in government-driven capital expenditure, private sector investment remains sluggish.

He said that while government spending on infrastructure has been positive, a pick up in private sector investment is necessary.

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