A rumor ate trillions of rupees of investors
New Delhi. How a rumor can destroy the hard earned money of investors in a blink of an eye. A big example of this was seen in the fall in the Indian stock market on Monday. Market analysts say that a rumor about LTCG tax spread among investors and panic selling took hold.
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Ajay Kedia, director of Kedia Advisory, said that there was a rumor in the market about Long Term Capital Gain (LTCG) tax that the government can make major changes in the coming budget. This will have a direct impact on the earnings and tax liability of the investors. This thing shocked the domestic investors as well as the foreign investors and they started withdrawing their money from the Indian capital market. The market sentiment was affected by the reduction in foreign investment portfolio (FPI), whose effect was seen in the form of a big fall.
There was a rumor about this
It was said on behalf of the bears that the government can increase the tax rate from the current 10 percent to 15 percent by revising the LTCG in the budget. Along with this, it is also planning to increase its duration from 1 year to 3 years. Panic spread in the market due to just this thing. Foreign investors also started running in reverse without thinking anything and on seeing it, about 9 lakh crore rupees were drowned in the market.
Here, investors are demanding removal of tax
Stock market investors are demanding the government to abolish LTCG tax in the budget. What is the logic of levying LTCG tax when investors are already paying Security Transaction (STT), he says. Stock market experts say that the transaction tax in India is very high. In such a situation, LTCG has an adverse effect on the market sentiment.
Double hit on investors
Investment advisor Balwant Jain says that STT should be removed completely or it should be cut slightly. It was initially implemented in place of LTCG but now both LTCG and STT are applicable. This puts a double burden on the investors, which is not right from the perspective of the Indian capital market.