-- India made significant changes to taxes on gains from equity investments and stock derivatives for the first time in decades, seeking to curb the surge in speculative trading in the nation’s $5 trillion market.The government raised the levy on stocks held for less than 12 months to 20%, the first hike since 2008, and to 12.5% from 10% for those held for more than a year, according to the budget presented in parliament Tuesday. The securities transaction tax on equity options was hiked to 0.
Still, the stock market took the tax blow and warnings in its stride. The benchmark NSE Nifty 50 Index recovered nearly all of its losses after dropping as much as 1.8% after Finance Minister Nirmala Sitharaman announced the changes in her 90-minute long presentation.Indian equities are set for a ninth straight year of gains, boosted by its tag of the world’s fastest-growing major economy, a gush of local money and strong corporate profit growth.
The notional volume shrank more than 40% from its peak in February to $3.3 trillion on Monday, data compiled by Bloomberg showed. The tax hike “will undoubtedly impact the profitability of frequent traders,” said Vaibhav Porwal, co-founder at wealth management firm Dezerv. The widening gap between short- and long-term capital gains tax rates is “a clear incentive for long-term holdings,” he said.Trash dropped by a North Korean balloon falls on South Korea’s presidential compound