Many financial advisors believe that the re-introduction of long term capital gains tax on equity funds will have a negative impact on long term investments in equity funds.
Here is what they have to say about the Union Budget 2018.
Dhruv Mehta, Dhruv Mehta Investment Advisor and Chairman FIFA
On the taxation front, the key change is the re-introduction of the long term capital gains tax on equity shares and equity funds at 10%. This may deter long term investments in equity funds. However, the government should have done away with the securities transaction tax (STT) on equity instruments. With the latest development, equity is now taxed twice.
Though the government has not tweaked income tax rates for salaried individuals, it has given a standard deduction of Rs 40,000 to provide some relief to them.
Hemant Rustagi, CEO Wiseinvest Advisors
The budget did not offer anything to the salaried class by way of reduction in tax slab rates or an increase in exemption limit for the salaried class. However, standard deduction of Rs.40,000 will do away with the requirements of submitting unnecessary documents.
The long term capital gains tax of 10% on equity funds will affect the net returns of equity funds. People who have started investing in mutual funds recently will be disappointed. However, I believe that equity will continue to provide better post tax returns compared to other classes.
Bharat Bagla, Bees Network
Budget 2018 wasn’t exciting for me. As far as taxation is concerned, long term capital gains tax will now get cumbersome due to the introduction of grandfathering concept. I think such a clause could have been avoided to make it simple.
Talking about salaried class, standard deduction of Rs.40,000 will not create much difference as they are already getting the deduction of Rs.34,200.
Gaurav Mashruwala, A Cutting Edge
The budget 2018-19 has proposed exactly what was required to accelerate the economic growth. The budget proposes benefits to senior citizen in terms of increase in health insurance premium and certain critical illness treatments. On the contrary, there are absolutely no benefits to middle class people.
On re-imposition of long term capital gains tax, it was widely expected by market participants and investors. I don’t see any ignificant impact of this move.
Suresh Sadagopan, Ladder 7 Financial Advisories
The budget overall did not have anything to offer to middle class people. Tax sops such as standard deduction of Rs.40,000 may not create difference in their finances. However, the government has increased the education cess from 3% to 4% that is more painful for them.
