COMMENT - Budget 2018: How the math makes sense for Jaitley to introduce long-term capital gains

作者:Charlene 發表日期:2018-02-02 19:04:03

Whether Finance Minister Arun Jaitley will introduce a long-term capital gains tax on equity or not has grabbed a disproportionate amount of the market’s attention. Here’s the logic in favour of the move:


Let us first take a look at how much government garners from Securities Transactions Tax (STT) that is levied on every equity transaction. For FY18, it is budgeted to be Rs 7,767.9 crore, or 0.4% of gross tax revenue for the year. Going by the total turnover data of BSE and NSE (Rs 10,04,31,415 crore) it works out to 0.01%.


So should STT get abolished and get replaced by Long Term Capital Gains, on a conservative basis, the earnings can actually double.


The total cash market turnover in FY17 was Rs 60,54,174 crore in FY17. As per our calculation, 50% of this was buy transactions which is approximately Rs 30,77,087 crore. If 25% of this transaction is meant for holding for the long-term (beyond one year), the value of such long-term transactions is Rs 7,69,272 crore.


Taking a historic average gains percentage of 15%, the average long-term gains works out to Rs 1,15,390 crore. The intended 15% long-term capital gains tax works out to close to Rs 17,308 crore, which is much more than the revenue sacrificed by abolishing STT. So it does make immense economic sense.


Whether Mr Jaitley will choose to bite the bullet or not is a different matter altogether, and could be driven by perception and politics.

India Union Budget 2018-19 Live: News, updates and highlights from FM Arun Jaitley's Budget 2018 speech, announcements. Click here.

India Union Budget 2018: What does Finance Minister Arun Jaitley have up his sleeve? Click here for top and latest Budget 2018 news, views and analyses.

India Union Budget 2018: What does Finance Minister Arun Jaitley have up his sleeve? Click here for top and latest Budget 2018 news, views and analyses.

本文來源:http://www.moneycontrol.com/news/business/markets/comment-budget-2018-how-the-math-makes-sense-for-jaitley-to-introduce-long-term-capital-gains-2496907.html




Tag:
本文鏈接:http://www.graduation-studio.com/77711.html