Govt will not withdraw STT, says Jaitley

In an admission, which may not be pleasing to the stock market when it opens on Monday, Finance Minister Arun Jaitley Saturday said
he is not considering withdrawing securities transactions tax (STT), even as his Budget has imposed the long term capital gains (LTCG) tax.

"At present STT remains and I do not want to give any cause for speculation. Even when short-term capital gain tax was there, STT existed with that," Jaitley said, a day after his proposal to re-introduce LTCG spooked the stock market wiping out Rs 5 lakh crore from investors' wealth in a single day.

The Budget for 2018-19 proposed a 10% LTCG on stock market gains exceeding Rs 1 lakh. The provision made a re-entry 13 years after it was abolished in 2005.

"Wealthy investors cannot enjoy tax exemptions for long," Jaitley said, adding that small investors needed protection so the government has exempted profit up to Rs 1 lakh of capital gains on equity.

Separately, Finance Secretary Hasmukh Adhia tweeted "there is no change in STT regime on equity. It stays". The topmost secretary in the finance ministry also said that was not worried about the stock market crash as ther should be no privilege to one asset class over the other.

Experts, however, said that this may well be a correction in the market which had accumulated a lot of froth of late. Chief Economic Advisor Arvind Subramanian too had expressed concerns in his Economic Survey and cautioned the government saying stock markets in India had surged despite a deceleration in economic growth which was a cause of worry.

The Survey authored by him had also advised the government to be vigilant about the stock market movement as they would correct themselves sooner than later.