Arun Jaitley does a UPA vs NDA: FM says LTCG tax required in present situation, markets crashed on global cues
Arun Jaitley said the downslide in the bourses was not caused by the reintroduction of LTCG and attributed negative global cues
New Delhi: Defending the ruling NDA's management of the economy as compared to the previous UPA government's record in this regard, Finance Minister Arun Jaitley on Thursday ruled out any rollback of the Long Term Capital Gains (LTCG) tax reimposed for the coming fiscal.
Presenting his last full budget before the general elections due in early 2019, Jaitley proposed to tax LTCG on equities exceeding Rs 1 lakh at 10 percent, which is expected to bring in revenue of Rs 20,000 crore.
"There was a time when LTCG was not imposed because we wanted to get money into the stock markets," Jaitley said replying to the discussion on the budget in the Lok Sabha.
"That is no longer the situation. We did an assessment and found that the exempted income from Long Term Capital Gains last year amounted to Rs 3,67,000 crore," he said in defence of the exchequer's search for revenue at a time when he has announced a rise in the fiscal deficit targets for the current and the next year.
"Only a fraction of this amount is accounted for by small investors. Most of them are large corporates, high net worth individuals, foreign institutional investors and LLPs (limited liability partnerships)," he added.
A day after the Union budget was presented in Parliament, Indian equity markets witnessed the steepest fall since November 2016 leading the Sensex to shed over 800 points and the Nifty50 over 200 points in a single day.
Jaitley said the downslide in the bourses was not caused by the reintroduction of LTCG and attributed negative global cues.
"It is not due to the budget or the LTCG that (US-based) Dow Jones had been falling for five days dragging the Asian markets down," Jaitley told the Lok Sabha.
He also took on the criticism of Congress MPs on the government's handling of the economy, saying structural reforms such as GST, Aadhaar and consequent improvement in India's global rankings had been accomplished under the National Democratic Alliance regime.
"I don't remember a single structural reform taking place between 2010-14, while the fiscal deficit during the Congress was at 6 percent. We inherited a deficit of 4.5 percent and have been bringing it down steadily ever since.
"In a matter of months we have managed to stabilise GST (Goods and Services Tax) with the help of the states and started rationalising rates," he pointed out, noting that only those categories that were paying cumulative pre-GST taxes of 31 percent had been transferred to the highest GST slab of 28 percent.
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