Stock market fluctuations not linked to tax policies: DEA Secy Ajay Seth

Stock markets go up and down for different reasons, and they have nothing to do with taxation; tax rates and stock market are different issues, said Economic Affairs Secretary Ajay Seth

Economic Affairs Secretary Ajay Seth has said that recent stock market ups and downs are not related to taxation policies. Speaking at a press conference in Vishakhapatnam on Thursday (March 6), he said that stock markets move for various reasons, and taxation is a separate matter.  

 

“Stock markets go up and down for different reasons, and they have nothing to do with taxation. Tax rates and stock market are different issues,” said Seth, according to a report by MoneyControl. 

 

He also reaffirmed that the government follows a uniform tax policy across different types of investments. “The government of India does not take a view on differentiating between different asset classes. We charge them uniformly,” he said.  

 

Seth pointed out that in Union Budget 2024, the long-term capital gains tax rate was adjusted to 12.5 per cent without indexation. Earlier, it was 20 per cent with indexation. This change was made to simplify capital gains taxation and make calculations easier for investors.  

 

The DEA Secretary also highlighted India’s strong economic performance, saying that the economy has grown by over 7 per cent in the past three years. “The economy is doing well,” he added.  

 

Reasons behind market volatility  

 

Notably, the Indian stock market has seen sharp movements in recent weeks. The Nifty 50 closed at around 22,550, while the BSE Sensex gained about 610 points on Thursday. This recovery came after a difficult period where the Nifty 50 faced its longest losing streak since 1996, dropping 15 per cent from its September peak and erasing $1 trillion in investor wealth.  

 

Economists have pointed out multiple reasons for this volatility. They cite the United States' decision to impose tariffs on key trading partners, including China, Canada, and Mexico, which has increased trade tensions and affected global growth.

 

Concerns over potential reciprocal tariffs on India have also impacted investor confidence. In addition, foreign institutional investors have been withdrawing funds from Indian equities, selling nearly $25 billion since September. 

 

Corporate earnings growth has also been slow, with Nifty 50 companies reporting just a 5 per cent increase in profits in the October-December quarter, marking the third straight quarter of single-digit growth.