Budget 2018 reintroduced long-term capital gains tax (LTCG) for equities and equity mutual funds, which had been tax-free since 2004. Will this result in lower inflows? We ask the experts.
Sanjay Sapre, President, Franklin Templeton Investments – India
There are three reasons why I feel inflows may not be impacted. First, equity flows have been more a function of market cycles than of tax changes. In fact, we are in a much stronger position now with sustainable flows from systematic investment plans (SIPs) of nearly Rs6,500 crore every month. We have also seen in the past that when the LTCG tax period for debt funds was increased from 1 year to 3 years in 2014, the impact was short term.
