Budget 2018: Betting on stock market boom? Capital gains tax may end party

Why the Big 4 continue to gain in audit industry

BUDGET 2018 - The taxman may end up being a speed bump for the Indian stock market, which like its counterparts across the world has marched to multiple records in the past year.

Brokerages including Kotak Securities say Prime Minister Narendra Modi's administration may make it harder for investors to claim exemptions on capital gains from equity investments when the federal Budget is announced on February 1. Modi's move in 2016 to scrap high-value currency bills and the implementation of the new sales tax last July have hurt demand and revenue, forcing the government to borrow more.

"The government has to find avenues for generating additional revenue to bridge the fiscal deficit," Shefali Goradia, partner at Deloitte Touche Tohmatsu India LLP, said in an interview in Mumbai. "Tweaking the long-term capital gain break is a low hanging fruit."

Even so, the government may shy away from doing so -- any change may spook individual investors, who've flocked to mutual funds since Modi swept into power in 2014. The main S&P BSE Sensex soared 28 per cent last year, beating the S&P 500's 19 per cent advance, as domestic funds bought a record $19 billion of shares -- more than double the inflow from overseas. The cash ban helped accelerate the shift to financial assets, taking the sheen off gold and property.

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