Understanding Union Budget 2024: Investments are Expensive
New taxes on capital gains and transactions have made investments more expensive, causing a significant drop in the Indian stock market.
Investing has become more expensive for Indians. New tax changes have affected short-term and long-term capital gains, as well as the Securities Transaction Tax (STT).
Short-term Capital Gains Tax Increase
Short-term capital gains are profits from selling personal or investment properties held for one year or less. The tax on these gains has increased from 15% to 20%. However, the exemption limit remains the same at ?1.25 lakh per year.
Long-term Capital Gains Tax Increase
Long-term capital gains are profits from selling shares or mutual funds held for more than one year. The tax on these gains has gone up from 10% to 12.5%. The exemption limit has also increased from ?1 lakh to ?1.25 lakh per year.
Securities Transaction Tax (STT) Increase
STT is a tax on the purchase and sale of stocks, bonds, and investment contracts listed on Indian stock exchanges. The STT rate has doubled from 0.01% to 0.02%.
Impact on the Stock Market
These tax changes caused more than 2,900 stocks to fall. Indian stock market benchmarks, the Sensex and the Nifty 50, plunged by almost 5% each on 23rd July 2024.
