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Steps on LTCG Tax and Corporate Tax to have deep impact on Indian economy, say experts

Monday, February 12, 2018
By A Business Reporter

(L-R): Jayesh Kariya, Partner, International Tax and Regulatory, BSR and Associates, M.S. Mani, Partner, GST, Deloitte India, Rajesh S. Athavale, Head- Direct Taxation, JMP Advisors, Y.R. Warerkar, Executive Director, WTC Mumbai, Firoze B. Andhyarujina, Sr Advocate, High Court Mumbai, Girish Vanvari, National Head of Tax, KPMG in India, Siddhartha Rastogi, Director, Ambit Capital.

“Union Budget 2018-19 is a farmer-centric budget and a step towards universal healthcare and more particularly for the poor people. The reduction in corporate tax for companies upto Rs 250 cr turnover is a welcome step. However, the introduction of LTCG is a retrograde step at a time when India’s economic growth is recovering. The imposition of LTCG will be an additional tax burden on all investors as they already pay Securities Transaction Tax (STT). Therefore, investors are taxed both at the time of purchase and sale of shares. Also, the introduction of LTCG raises uncertainty on computation of losses and the computation of the LTCG itself,” said Firoze B. Andhyarujina, Senior Advocate, High Court Mumbai at a Panel Discussion on ‘Implications of Union Budget 2018-19’. The Panel Discussion was organized jointly by World Trade Centre Mumbai and All India Association of Industries (AIAI) at WTC Mumbai on February 6, 2018.

India is said to be the only country to impose both LTCG and STT on investment in equity. Girish Vanvari, National Head of Tax, KPMG in India lauded government for introducing LTCG in a calibrated manner. “The impact of LTCG is not a large as it is made out to be. Although the government has imposed 10% LTCG, most foreign investors may end up paying nil percent or at the most 5% as LTCG is not applicable for investment arising from tax havens and countries with whom India has signed tax treaties. The government has also grandfathered the existing investments to avoid retrospective implementation of LTCG. Further, the tax authority has released FAQs (frequently asked questions) to address the concerns of non-residents.” Vanvari said.

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