NEW DELHI: No bad news is good news, and that probably partly explains why market volatility this Budget month is the lowest in many years. But investors have their own sets of worries, uppermost being the fear of a long-term capital gains tax making a likely comeback.Foreign brokerage BofA-ML noted that India is only among a few that do not tax long-term gains on equities. India used to have this tax earlier before scrapping it in 2004.But in late 2016, Prime Minister Narendra Modi had spoken of the need to tax gains on long-term equity investments.BofAML believes a sharp rally in the market bears this out.Under the current norms for equities, an investment in securities for a duration of less than 12 months attracts short-term capital gains tax of 15 per cent, in addition to surcharge and cess. However, gains on such investments beyond 12 months are exempted from taxes if the Securities Transaction Tax (STT) is paid on sale transactions.This is against 36 months considered for taxation of non-equity MF schemes. Such funds are taxed if held less than 36 months and are subject to long-term capital gains tax ( LTCG ) at 20 per cent after indexation.The taxation is different when it comes to other asset classes.While developed markets have LTCG in some form or the other, the scenario for EMs is mixed with almost full exemptions in countries such as China , Thailand, and Singapore and partial exemptions with progressive taxation Brazil and Indonesia, ICICI Securities said in a note.

Source: Economic Times January 25, 2018 08:03 UTC