Samir Arora & Shankar Sharma had warned that LTCG tax would sound death knell
When Shankar Sharma had warned that “Long-term tax could kill cult of equity investment in India,” some intellectuals dismissed it as empty rhetoric.
However, Shankar was undaunted by the criticism of his views.
“Bull market thinking is pushing bizarre ideas. If instead we get into a bear market, then the government will do everything to attract investment instead of taxing investors.
We should not de-incentivise people from entering into the equity market.
It is only in the bull market scenario that government can talk about such a tax whereas there they will prudently reverse any such measures to attract inflows whenever there is a severe correction in the markets,” he continued, exhibiting wisdom.
Samir Arora, who is otherwise regarded as a NAMO Bhakt, was also up in arms against the dreaded tax.
“Foreign investors are not taxed in most developed countries. India is already charging transaction tax on equities, which is levied irrespective of profits or loss.
In such a scenario, what is the use of bringing in LTCG, when government has no idea how much it will yield and more than that kill the equity markets.
This is not a reform in any way,” he rushed, in his typical fast style of speaking.
Other investors were also frustrated by the tax and vowed to never vote for NAMO and the BJP.
WAS a Bjp Voter for last 30yrs.WAS.
— Deep Fry (@instantsamosa) February 1, 2018
— Gaurav Banga (@gauravbanga15) February 1, 2018
I am not going to make an effort to goto polling booth itself.. Simply meaningless.
— Vikas Joseph (@vikasgj) February 1, 2018
Also isnt it painfully ironic that the white skin FII’s coming from Mauritius gets a tax free status on their stock investments whereas the brown skin middle class which voted @BJP4India and @narendramodi to power is being taxed all over?
— Basant Maheshwari (@BMTheEquityDesk) February 1, 2018
Absolute joker. Ltcg without indexation? So pay tax on inflation?
— Subramoney.com (@pvsubramanyam) February 1, 2018
Insult to injury
Hasmukh Adiha, the then Revenue Secretary, added insult to injury by commenting in a flippant manner that capital gain deserves to be taxed because it accrues “without any effort“.
Capital gains don’t accrue from any effort, Finance secretary Hasmukh Adhia says – Times of India https://t.co/wVUB04lO1s
— Suhas Govilkar (@suhasgovil) February 4, 2018
Hey Hasmukh @adhia !!, I give you 1000k w/o interest … Please show the world how make capital gains from stock market without any efforts… and hey @narendramodi pls tell us from which planet you brought this nut Adhia? We can mass make him into a robot for capital markets..
— Bharat Thakkar (@Bharat400053) February 4, 2018
Was Mr. Adhia's statement about No efforts in earming capital gains irresponsible and does it show this Govt's arrogance & Ignorance?pls ask
— K.P. (@kpthakershy) February 4, 2018
The real joke is a statement from Finance Secretary Hasmukh Adhia "Capital gains don't accrue from any effort"
— Waman Shirwaicar (@Shirwaicar) February 3, 2018
— Rishi Bagree ?? (@rishibagree) September 24, 2018
NAMO & Arun Jaitley also crippled the market with oil subsidy burden on OMCs
When they came into power, NAMO & Arun Jaitley had taken the vow that they would free OMCs (Oil Marketing Cos) like IOC, HPCL, BPCL etc from the shackles of price regulation and leave them free to operate in the market place.
Following this assurance, investors poured in billions of dollars into OMC and other stocks.
However, the duo did a somersault and directed the OMCs to bear a part of the subsidy burden.
This shook investors’ confidence and led to a cataclysmic wave of selling.
Investors suffered incalculable losses of 1,390,000,000,000 (1.39 lakh crore) in just 35 minutes of trading over two days.
Citi On OMCs
Govt Finally Buckled
Re-imposition Of Price Controls Unequivocal -ve
Lower FY20-21 EBITDA By 32-35% For BPCL, 39-42% For HPCL & 25-27% For IOC
Cut Target By 42-57% & Downgrade All 3 OMCs From Buy To Sell @CNBCTV18News @latha_venkatesh @_soniashenoy @_anujsinghal
— Nimesh Shah (@nimeshscnbc) October 5, 2018
— Rutam Vora (@RutamV) October 4, 2018
Apart from profitability, this move could have possibly hit investor confidence.
~38,600cr MCap lost yesterday
~25,900cr MCap lost today till now
(For all 3 OMCs) https://t.co/CjblK9wg11
— Sonal Bhutra (@sonalbhutra) October 5, 2018
We can imagine the extent of fury in Dalal Street against such misconceived decisions that even Porinju Veliyath, a die-hard fan of NAMO, slammed the Government for “unethical” behavior.
A prudent thing would have been to keep OMCs away from subsidizing – instead raise 7000 Cr as an extra dividend from OMCs and bear full Rs.2.5 per litre cut. This could have saved Rs.1.32 lac cr. investor wealth, most of which is govt's own! @narendramodi
— Porinju Veliyath (@porinju) October 5, 2018
Piyush Goyal’s appointment as Finance Minister is fortuitous for Dalal Street?
In a fortuitous turn of events, both the architects of the dreaded LTCG tax, namely, Hon’ble Arun Jaitley and Hasmukh Adiha, are out of the scene.
Instead, Hon’ble Piyush Goyal has been appointed Finance Minister to present Budget 2019.
BREAKING NEWS | Piyush Goyal named interim Finance Minister, Arun Jaitley to be minister without portfolio. pic.twitter.com/SVqlK3rmjT
— ETMarkets (@ETMarkets) January 23, 2019
It is notable that Piyush Goyal is a highly qualified Chartered Accountant and has a brilliant commercial mind.
He also has a deep understanding of the workings of the stock market.
Piyush Goyal is named as interim Finance Minister. A proud moment for the Chartered Accountant community of India. A brilliant mind, a scholer & a wonderful human. Having said that, hope Arun Jaitley gets well soon & resumes his job
— Ra_Bies (@Ra_Bies) January 23, 2019
I really wish Piyush Goyal become permanent Finance Minister as Arun Jaitley has lost connect with the masses.
Not giving relief to Middle class in the election year & imposing LTCG (thus killing Market sentiments) is the low point of his ministry.
Hope PG reins Tax terrorism
— Rishi Bagree ?? (@rishibagree) May 14, 2018
(Piyush Goyal at the London Stock Exchange)
Nayi Mohim – Scrap LTCG Tax: Zee Business
Anil Singhvi, the charismatic editor of Zee Business, has been a stiff opponent of LTCG Tax.
When it was first introduced, he had protested vehemently.
Long term cap gains……NO NO NO……clear No https://t.co/MtMWIX9Lim
— Anil Singhvi Zee Business (@AnilSinghviZEE) January 11, 2018
Now, on the eve of Budget 2019, he is inspiring his massive army of viewers and leading a crusade against LTCG tax.
— Zee Business (@ZeeBusiness) January 23, 2019
The movement has met with rousing support from rank and file investors.
If LTCG tax not removed then no one gonna support BJp who has invested in equity & mutual fund and I can say all salaried person have invested. I used to act like BJP IT cell member and fight with haters of BJP but if LTCG tax there,all will start hating BJP. Sare paise doob gaye
— Pariwartan Singh (@PariwartanSingh) January 26, 2019
Fully support #LTCGHatao initiative. Already paying so many taxes. Common man is investing out of already tax paid money and long term investing needs to be encouraged.
— Neeraj Sharma (@Neeraj_Sharma_) January 23, 2019
The idea of #LTCG esp on MF is a retrograde idea which @narendramodi @narendramodi_in should understand. "A few dollars more " shouldn't be their motto. Besides more money is lost in adhering to procedural formalities. So #LTCGHatao
— Awadhesh (@Awadhes95017541) January 23, 2019
Why is BJP so ANTI-SHARE MARKET?#LTCG Tax was removed by #Congress in 2004, has been brought back by #BJP in 2018 recklessly. BJP wants to scare away share investors? Why so much apathy?This year more than 85% stocks are not eligible for LTCG! Penny wise pound foolish #Budget2019
— Jigar (@Jdpatel19Jigar) January 25, 2019
Remove LTCG. Also please remove short term & long term capital gain tax. Govt always encourage long term equity investment coz it's a healthy practice & good for economy. There should be one time single tax only. This will help to get more vote in election
— sumanta (@sumanta_4u) January 23, 2019
Sir, If you accept these two demands will get very support from the families of investors..
— Manoj Kumar (@Pranay2270) January 23, 2019
Prima facie, it appears that the consensus is that the junkyard LTCG tax should be scrapped so that sentiments are revived and investors flock back to Dalal Street. It is hoped that Hon’ble Piyush Goyal will pay heed to these sentiments and do the right thing!