look news india
Mumbai: Modi-III's first budget proposals have been welcomed by most global brokerage houses, although there is resentment over the increase in capital gains tax. The increase in capital gains tax will hamper equity and real estate asset classes. Financial assets are expected to benefit, negating the benefits of indexation on non-financial assets (real estate and gold).
Revenue targets for the current fiscal year are achievable and tax estimates are viable. The budget has ensured a policy framework for long-term economic growth, a Goldman Sachs report said.
The report also said that we are bullish on Indian equities given the broad resilience and favourable provisions for domestic sectors.
There are three big surprises in the budget. Morgan Stanley said in its statement, one is the incentive scheme for job creation, simplification in the tax code and the fiscal deficit estimate has been kept lower than expected. Stanley said, however, the increase in capital gains tax in equity is contrary to our expectations. We are constructive on Indian equity.
Increased spending by the government will further accelerate the pace of the growth cycle. However, improvement in private consumption and capital expenditure is necessary, Nomura said. Income tax cuts will boost consumption demand, but the possibility of the benefit of the cuts being wiped out due to higher capital gains tax is not ruled out.
Higher STT on derivatives trading may impact operations in the F&O segment in the near term. As the benefits of indexation are eliminated while calculating capital gains on non-financial assets, the attractiveness towards financial assets is likely to increase, brokerage firm UBS said in a statement.
Emkay Global is of the opinion that the increase in capital gains tax is normal and not a big concern. Tax on buyback will impact the payout.