On Tuesday, Indian markets fell to their intra-day lows, reacting on Finance Minister Nirmala Sitharaman’s announcement on STT in Union Budget 2024.The Government has hiked capital gains tax, STT. As a direct impact, theNifty 50 plunged 353.10 points, or 1.44%, closing at 24,156.15. The BSE Sensex dropped 1,058.98 points, or 1.32%, settling at 79,443.10. The Nifty Midcap index experienced a significant decline as well, falling over 3% or 1,891.32 points to 54,733.50.
Whereas the Nifty CPSE index falls over 3% to intra-day low of 6,726.65 on the other hand S&P BSE PSU index fell over 3.5% to day lows of 20,795.27 led by all PSU stocks including HAL, BHEL, Mazagon dock, Cochin Shipyard, PFC, ONGC, RVNL, IRCTC and more.
How Much Has The Tax Hiked ?
Finance Minister Nirmala Sitharaman’s Budget speech unveiled several significant tax reforms that have contributed to the market’s downturn. Among the key announcements, the Finance Minister revealed that short-term capital gains on certain assets will now be taxed at 20%. This change is aimed at simplifying the short-term gains tax system, which has been a point of contention for investors.
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Additionally, long-term capital gains on all financial and non-financial assets will be taxed at 12.5%. The government has also set the exemption limit for capital gains at Rs 1.25 lakh per year, a move intended to provide some relief to individual investors while increasing tax revenues.
How Much Will Be The New STT Charges ?
In a further change affecting the trading community, the Securities Transaction Tax (STT) on derivatives has been revised to 0.02%. This adjustment is expected to impact trading volumes and costs in the derivatives market.
These announcements, combined with the broader market conditions, have led to a cautious investor sentiment, as stakeholders adjust to the new fiscal landscape. The market’s response underscores the sensitivity of financial markets to policy changes and the importance of investor perception in shaping market movements.