Sensex slide not due to capital gains tax: Finance Minister Arun Jaitley
NEW DELHI: Even as the stock markets continued its slide on Monday, finance minister Arun Jaitley and his team said that the market crash is due to “negative global clues” and not due to the long-term capital gains tax imposed in the Budget.
“It is not due to the Budget or the LTCG. Dow Jones has also fallen by over two per cent,” Jaitley told reporters on the sidelines of an event here on Monday.
The Budget had imposed a 10 per cent LTCG tax, following which the Sensex started its downslide. After closing in the red on the Budget day, it witnessed the steepest fall since
November 2016, slipping by over 800 points on Friday and the trend continued even on Monday with the Sensex shedding 309.59 points.
Last week, Jaitley had said the government was hopeful of collecting `20,000 crore from LTCG.
On Sunday, income-tax department came up with a detailed clarification on LTCG saying price indexation (adjustment to inflation) will not be available for this tax, which comes into effect from April 1, 2018.
The CBDT further clarified that existing tax regime was inherently biased against manufacturing and has encouraged diversion of investment to financial assets. It has also led to significant erosion in the tax base resulting in revenue loss. The problem has been further compounded by the abusive use of tax arbitrage opportunities created by these exemptions.
On Monday, finance and revenue secretary Hasmukh Adhia noted that LTCG of 10 per cent was still lower compared to other assets and equity investments still remain attractive.
Not bringing petrol and diesel under GST anytime soon, says Jaitley
The government on Monday ruled out the possibility of bringing petrol and diesel under the ambit of Goods and Services Tax (GST) in the near future as the states are against it. “So far the mood of the states are not in favour of bringing petrol and diesel under GST,” finance minister Arun Jaitley said. He added that once the states are well settled with GST, it will first bring natural gas and real estate, and then will consider bringing petrol and diesel under GST.
States and the Centre, however, have not been able to build a consensus on revenue sharing. Jaitley also said the government cannot act like a commercial entity in matters of public procurement which could lead to unfairness. “We’ve now moved to the other end of the spectrum where the state can only act in a particular manner when it comes to public procurement,” Jaitley said at the South Asian Regional Procurement Conference in New Delhi.