We will soon complete 13 months of the Nifty being below its all time high hit in end Sep 2024.
The high capital gains taxes on all asset classes and a very poorly thought out tax on share buy backs is constraining Indian markets.
The golden goose is being butchered in the quest to extract the maximum from the 5-6 crore investors/traders/affluent.
Korea offers a good model...proposed high capital gains taxes were shelved in the light of the global policy chaos.
Korean markets are hitting daily record highs.
Not a one on one correlation, there is a lot else going right for South Korea for now.
But this has been a huge sentiment booster.
The Indian govt will collect over Rs 60,000 crores as STT.
STT was introduced while the then FM said on the floor of the Parliament that zero capital gains tax is being enshrined with this STT being levied.
Overtime STT has been increased and huge short term and long term capital gains taxes, as well as tax on dividends, as well as taxes on tendering shares for share buy backs, have been brought in.
This is in addition to SEBI charges, stamp duty , IGST , exchange charges and brokerage.
Investors are the proverbial Golden Goose.
And even if they dont make money, they have to pay all these fixed charges from STT to a long list of charges.
Over the last 12 months, most Mutual Funds and the Indian stock indices have yielded negative returns. However. investors are in the dock for all these fixed charges.
And the few who made money have to pay huge capital gains taxes.
Laffers Curve works
Lower taxes lead to higher government revenues, higher compliance and less suppression.
We see thousands of UHNI investors relocating their base to tax advantaged locations to avoid these high taxes.
The revenue loss increases with every hike in taxes and hike in other levies.
Need some action to unleash positive sentiments in the Indian investment landscape.