Presenting the Budget proposals for 2018-19, on February 2, 2018, finance minister Arun Jaitley said returns from the stock market are quite attracting and it was time to bring them under the ambit of capital gains tax.
“The return on investment in equity is already quite attractive, even without tax exemption. There is, therefore, a strong case for bringing long-term capital gains from listed equities, in the tax net,” he said.
However, observing that a vibrant equity market is essential for economic growth, Jaitley said, “I propose only a modest change in the present regime. I propose to tax such long-term capital gains exceeding Rs one lakh, at the rate of 10 per cent, without allowing the benefit of any indexation.” He further said all gains up to January 31, 2018, from sale of equity will be grandfathered. Gains from sale of stocks after one year, were exempt from capital gains tax.
According to Joe Verghese, managing director, Colliers International India, “The change in capital gains tax for equity, could accelerate the shift of preference from equity to other investment assets like real estate. This would be a reversal of the trend we have seen in the last five years. More investment could start to real estate.”