Union budget: Dalal Street wants the abolition of the tax on stock market transactions

New Delhi: The biggest positive trigger for Dalal Street in the upcoming Union Budget 2022 could be any abolition of Securities Transaction Tax (STT).

Market participants will also be eagerly awaiting the review of laws dealing with dividend withholding tax, the removal of LTCG on all stock plans, the removal of tax arbitrage between mutual funds and assurance in terms of change and clarification of tax aspects on F&O transactions, Mehta Group said in a report.

The new normal these days is “working from home”. The budget should introduce a standard deduction for additional expenditure incurred by the salaried class to meet communication and infrastructure needs. In addition, the government should consider increasing the deduction limit for interest paid on home loans, as the pandemic has accelerated the demand for new, larger homes to accommodate work space. Thus, incentives to support the housing sector may include higher tax exemptions on interest and principal payments on housing loans. This will help the real estate sector immensely, according to the report.

The Budget theme will continue to revolve around Covid-19 (increase in healthcare spending). Likely additional provisioning for vaccine-related costs. The government should focus on increasing spending in priority sectors such as health, social sector, education and supporting sectors such as hospitality, retail, aviation, infrastructure , agriculture, construction and housing, according to the report.

The street will be watching if the government is able to reverse the economic downturn caused by Covid-19, which has led to severe financial disruption at industry and individual levels.

The government should consider narrowing the scope of transactions covered by TDS compliances, flexibilities for non-resident taxpayers in compliance returns where taxes have been withheld appropriately, and providing clarifications on certain controversial issues, in particular on the new equalization levy charge and the TDS/TCS provisions on e-commerce and also abolish the applicability of the revenue calculation and disclosure standards, according to the report.

The priority attention would be the revival of the economy, in particular through the creation of jobs, in particular for less qualified workers, in order to stimulate incomes and demand. Job creation is of paramount importance in reviving India’s engine of growth. We suspect the government will give concessions to labor-intensive industries like construction, housing, road building and irrigation, according to the report.

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