April 4, 2020
Abolish Long Term Capital Gains Tax and Tax on Buyback of Shares to Boost Investor sentiments and revive traction in the stock markets – PHD Chamber
We appreciate the government for its pro-active and extensive preventive measures to protect the its citizens and the economy from the adverse impact of the unprecedented catastrophe which has befallen on the Nation by the spread of Covid-19 pandemic, said Dr D K Aggarwal – President, PHD Chamber of Commerce and Industry.
It is evident that the global spread of Covid – 19 pandemic has had an immensely adverse and lasting impact on the stock markets, both domestic and international, which has hampered the investor sentiments in a big way, said Dr D K Aggarwal.
PHD Chamber in its suggestions to the government has made a representation to Chair, CBDT to abolish taxes on buyback of shares and on the long term capital gains.
As a suggestive measure to revive the investor sentiments and to encourage momentum in the stock market transactions, the Government should abolish the tax on buyback of shares as the prices of shares have come down drastically and to the unrealistic levels amid pandemic Covid-19 impact on economy, trade and industry, said Dr Aggarwal.
The government introduced tax on the buyback of shares at 20% in the Union Budget 2019 -20, announced in July 2019, said Dr Aggarwal.
Abolition of tax will attract lot of companies to buy back their shares which have fallen to the unrealistic low levels, said Dr. Aggarwal.
Also, the long term capital gains tax should be brought down to zero to encourage investments in capital markets to boost confidence in the market and to encourage people to invest for the long term, said Dr Aggarwal.
The long term capital gain tax was introduced in the year FY 2018-2019 and is being taxed at 10% for Equity Asset Class, on the gains exceeding Rs. 1 lac, said Dr Aggarwal.
This move will help in creating enthusiasm, boosting confidence of investors and bringing back the traction in the stock market during this difficult time, said Dr D K Aggarwal.
PHD Chamber of Commerce and Industry