The domestic equities market on Tuesday witnessed a significant sell-off. The stock market’s disappointment during the Budget 2024-25 comes even as Finance Minister Nirmala Sitharaman hiked short-term and long-term capital gains tax, apart from increasing securities transaction tax on F&O.
The Sensex on Tuesday opened higher before the Budget 2024-25, but started losing ground even as the Budget Speech 2024-25 came closer. During the Budget Speech, the Sensex started falling and tumbled as much as nearly 850 points before recovering it a bit. As on 1:26 pm on Tuesday, the Sensex was trading lower by 654.79 points to 79,847.29, while the Nifty was trading 185.6 points lower to below the 24,350 mark at 24,325 points.
Why are markets falling today?
Presenting the Budget for 2024-25, Finance Minister Nirmala Sitharaman announced a hike in STT (securities transaction tax) on F&O (futures and options) securities by 0.02 per cent and 0.1 per cent.
She also hiked the long-term capital gains (LTCG) tax to 12.5 per cent from 10 per cent, while short-term capital gains (STCG) tax on some assets would be 20 per cent.
This means, if you sell listed securities such as equity shares and units of equity-oriented mutual funds (where equity exposure is above 65 per cent of the assets) before a year, then you will be charged short-term capital gains (STCG) tax at 15 per cent.
Kirang Gandhi, personal financial mentor, said, “The 2024 Budget has increased the short-term capital gains (STCG) tax to 20% and the long-term capital gains (LTCG) tax to 12.5%. This has caused some market instability as investors react to the higher taxes. While the goal is to raise more revenue, these changes might discourage short-term trading and make long-term investments more attractive, potentially changing how the market behaves in the coming months.”
However, she also said the government plans to raise capital gains exemption limit on certain financial assets to Rs 1.25 lakh per year for middle and upper middle class.
Income receipt on share buyback will be taxed in the hands of recipients, Sitharaman added.
To reduce tax litigation, the finance minister said the government is planning Vivad Se Vishwas Scheme 2024.
She also said Rs 10 lakh crore has been proposed for PM Awas Yojana – Urban 2.0 to address housing needs of 1 crore urban poor and middle class.
She also announced 12 new industrial parks to be developed under the National Industrial Corridor Development programme.
Stay informed with our comprehensive coverage of Union Budget 2024. Get the latest on new income tax slab rates for AY 2024-25 in Income Tax Slabs Budget 2024 LIVE Updates . Track the impact of Budget 2024 on the stock market in Stock Market Budget Day 2024 LIVE Updates. Watch Union Budget LIVE Streaming here
