This year, there is talk of changes, in particular, around the prevailing exemption on Long Term Capital Gains ('LTCG') from transfer of listed equity shares (held for a period more than 12 months)
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Every year in the run-up to the Union Budget, there is speculation of tinkering of the taxation regime on stock market gains. This year too, there is talk of changes, in particular, around the prevailing exemption on Long Term Capital Gains (‘LTCG’) from transfer of listed equity shares (held for a period more than 12 months). Also reports suggest possible changes to the holding period requirement or with regards to increase in the Securities Transaction Tax (‘STT’) rate.
Looking back, LTCG exemption on specified listed shares was introduced in the Union Budget 2003-04, which was presented by then Finance Minister, Mr. Jaswant Singh. The Final Budget was presented by then Finance Minister, Mr. Chidambaram. The LTCG exemption was extended to all listed equity shares. However, the same was subject to levy of STT at the specified rates. The stated position was that the introduction of STT would be a win-win for all concerned.
Before one dwells on the case for change of regime, it would be worthwhile to see how the Indian capital market has evolved over the last few years: