On LTCG-STCG tax hike in Budget 2024, THIS financial planner says ‘no doubt why millionaires move out of India’

LKR Advisors founder Lalit Rathi targeted the central government on Tuesday regarding the tax rise on long-term and short-term capital gains announced in Union Budget 2024, saying it will decelerate capital market growth. In a post on X (formerly Twitter), he wrote, “It just slows down Capital market growth.”

“Why on earth would govt want to derail the Indian story? Why they don't want Capital markets to prosper? I see no reason why they tinkered with this,” Rathi asked.

“In few days/weeks, investors will forget this and move forward. Govt will always have a final laugh. Ripple effect is never thought about. No doubt why millionaires move out of India once they make it up,” he added.

While presenting Budget 2024 in Parliament on July 23, Finance Minister Nirmala Sitharaman unveiled significant tax changes affecting capital gains and trading activities:

Long-Term Capital Gains: The tax rate on long-term capital gains for both financial and non-financial assets will increase from 10% to 12.5%. The exemption limit for these gains is now set at ₹1.25 lakh annually.

Short-Term Capital Gains: The tax rate on short-term gains from specific financial assets will rise from 15% to 20%.

Besides this, other market-impacting announcements include a substantial increase in the Securities Transaction Tax (STT) rate, which will rise from 0.01% to 0.02%. This hike will double the tax burden for equity and index traders engaged in Futures and Options (F&O) transactions.

The finance minister outlined nine key priorities for this year and the coming years. These include enhancing productivity and resilience in agriculture, employment and skill development, inclusive human resource development and social justice, manufacturing and services, urban development, energy security, infrastructure, innovation and R&D, and next-generation reforms.

The focus on job creation and boosting consumption is expected to potentially benefit the consumer goods, real estate, and automotive sectors.