Budget 2024: 'Cruel, madness' - internet angry over capital gains tax hike

Union Budget 2024: Several people took to social media platform X (formerly Twitter) to criticise the move, noting that it is painful for stock market investors

Budget 2024: After Finance Minister Nirmala Sitharaman on Tuesday announced a hike in the capital gains tax structure, people across social media expressed their disappointment with the Centre for “failing” middle-class income groups.

Several people took to social media platform X (formerly Twitter) to criticise the move, noting that it is painful for stock market investors.

What is the revised capital gains tax structure?

During the Budget presentation, Sitharaman announced that income generated from equity investments will be taxed at 20 per cent from the existing 15 per cent if they are held for a period of less than one year. Similarly, investments held for more than a year will be taxed at 12.5 per cent from the existing 10 per cent. The minister also proposed to increase the LTCG annual tax exemption limit to Rs 1.25 lakh from the existing Rs 1 lakh.

 

Capital Gains taxation simplified and rationalised

Short Term Gains to attract a tax rate of 20% and Long Term Gains to attract a tax rate of 12.5%

Limit of exemption of Long Term Capital Gains on financial assets increased from ₹ 1 lakh to ₹ 1.25 lakh per year

Read more:…

— PIB India (@PIB_India) July 23, 2024

The definition of the two holding periods has also been revised to only two holding periods: 12 months and 24 months. According to the revised rules, for all listed securities, the standard holding period is proposed to be 12 months, and for all other assets, it shall be 24 months.

The ministry has also proposed a hike in the securities transaction tax (STT) on futures and options (F&O) securities to 0.02 per cent and 0.1 per cent. Unlisted bonds and debt mutual funds will continue to be taxed at the applicable tax rate, she said.

Internet fumes over hike in capital gains tax

As the announcement made headlines, people were quick to point out that the higher LTCG tax rate may dampen investor sentiment towards stock markets.

“Those who missed profit booking have to give more tax on LTCG now,” a chartered accountant professional, identified as @akhilpachori, remarked on X.

“I had said that it (Budget) would not be investor friendly,” another X user, identified as @Atulsingh_asan, said.

India taxes like first world country, provides quality of life like third world country.

— Ashish K. Mishra (@akm1410) July 23, 2024

One of the users pointed out that prior to the Budget there was a wider sentiment that the Centre might actually reduce the LTCG taxes to boost investor sentiment.

“India taxes like a first-world country, provides quality of life like a third-world country,” an X user @akm1410 noted.

“Increasing STCG and LTCG tax is just cruel. Fifteen per cent STCG was already too much; increasing it by another 5 per cent is just madness,” a user with the username @Anshi said.

If you are not making profits in stocks , you don't have to worry about hikes in LTCG and STCG taxes

- Nirmala Sitharaman, Union Budget 2024

— Sumit Behal (@sumitkbehal) July 23, 2024

More than 22,000 posts on X were trending with the hashtag ‘LTCG’ around 4 pm after the announcement.

In USA around 55% people invest their money in stock market, whereas in India only 3% people invest.

Instead of increasing taxes on LTCG and STCG, govt should have reduced the taxes to encourage investors.

People take high risk and invest in markets and govt just easily takes…

— Akshay Saini (@akshaymarch7) July 23, 2024

“If you are not making profits in stocks, you don't have to worry about hikes in LTCG and STCG taxes,” a user joked.

“STT was introduced to eliminate LTCG over time; today STT and LTCG both increased,” an X user @KirtanShahCFP said.

Noting that the proposed STCG tax hike is 33 per cent, a user @microcp2mltibgr said, “The Centre has to give a proper explanation to this!!! Else give such a 33.33 per cent hike in salaries to all employees.”