In recent years in India, the inclination of people to invest in the stock market has increased. At the same time, the habit of taking loans is also increasing among people. Due to this, banks have started facing shortage of deposits, but this time due to the changes made by Finance Minister Nirmala Sitharaman in the budget regarding capital gains tax, the good days for FD are expected to return.
This time in the budget, the short-term capital gains tax has been increased from 15 per cent to 20 per cent. At the same time, the long-term capital gains tax has also been increased from 10 per cent to 12.5 per cent. Not only this, the government has also abolished the indexation (inflation calculation) benefits available for asset classes like property and gold. The tax limit in this regard has been reduced from 20 per cent to 12.5 per cent.
Investment in the stock market will decrease
The government’s increase in short-term and long-term capital gains tax will reduce people’s inclination to invest in the stock market. The reason for this is also clearly visible. At present, whatever cash savings people have, they try to book profits by investing it in the stock market. But now the increase in short-term capital gains tax is expected to limit the volume of intraday trading.
read this too
A recent SEBI report also shows that 7 out of 10 day traders and investors in the country have suffered losses in the stock market. This is not a good situation for a low-income country like India. This is a red flag because most of the investors are in the age group of 30 years.
The government has also increased the tax rate on long-term capital gains to 12.5 percent. In addition, the benefit of indexation has also been removed. This will not encourage people to invest in other asset classes. At the same time, the profitability of investors who make huge profits by investing in these assets will also be affected.
Therefore, it can be expected that people’s investment in other traditional savings options will increase. Apart from reducing the problem of deposits in banks, it will also work towards increasing household savings in the country.
What do experts and statistics say?
Quoting Shivaji Thapliyal, head of research at Yes Securities, ET said in a report that this budget provision is indirectly good for banks. This will have a negative impact on physical assets like gold and real estate and equity investments.
On the other hand, RBI data shows that banks’ deposit growth is 11.1 per cent annually, while their loan distribution growth has been 17.4 per cent. Therefore, their deposit growth is very low and their deposit crisis is the deepest in the last two decades. In such a situation, this measure by the government can help increase banks’ deposits.
