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On Tuesday, the finance ministry clarified that there are no talks regarding the capital gains tax. They further stated that the Government has not received any proposals related to this matter.
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Reportedly, individuals familiar with the matter have stated that India is planning to revamp its direct tax laws. The purpose of this action is to simplify the complex set of regulations and aid Prime Minister Narendra Modi in reducing the gap between the rich and poor in the event of his return to power next year.
According to sources, although India imposes a tax rate of up to 30% on income, it applies a lower rate of tax to gains made on specific assets like equity funds and stocks. This approach is deemed regressive and not equitable.
The source further mentioned that a committee might be established to improve the recommendations presented to the Finance Ministry in 2019. However, no conclusive determinations have been made, as per the source. The implementation of any new measures could occur in 2024.
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Economists frequently attribute India’s neglect of direct taxes on capital and emphasis on indirect taxes – taxes on consumption – as the primary reason behind the exclusion of the country’s impoverished citizens, despite the creation of 70 new millionaires each day between 2018 and 2022. Oxfam International has estimated that the wealthiest 10% of India’s populace possesses 77% of the country’s total wealth, while government records indicate that merely 6% of the population pays income tax.
