FM Sitharaman ready to hear out stock market tax debate

New Delhi: Finance minister Nirmala Sitharaman on Tuesday said she will be "keenly hearing" the ongoing debate on stock investment taxes, long-term capital gains (LTCG) and securities transaction tax (STT), fuelling speculations about possible changes that fired up an otherwise lacklustre market late afternoon.

Sitharaman, however, declined to share any specifics, citing preparations for the Union Budget due in February. "We are very close to the budget... It may not be the best time for me to say what I will or will not consider," she said at the Bloomberg New Economy Forum.

Also read: Rupee volatility in focus as Sitharaman signals more RBI action, weighs LTCG tax debate


The finance minister also said the Reserve Bank of India (RBI) is trying to prevent rupee volatility through its measures and not "fix" a rupee level.

She added that fiscal discipline was not going to be a matter that should worry investors.

Sitharaman said the government is trying to keep economic fundamentals strong. Sectors such as renewable energy, semiconductors and chip design, biosimilars, pharmaceuticals, generic drug manufacturing and aircraft maintenance, repair and overhaul centres are drawing both domestic and foreign private capital, she added.

External Challenges and Uncertainties

"There's a lot of debate" over the tax commonly known as the securities transaction tax, the minister said, adding that the issue came up during her conversation with investors in India and abroad.

India levies an STT on stock market transactions and also imposes capital gains tax when profits are booked. Market experts have argued that this amounts to double taxation.

There have been comments that both are "running parallel and it's not right; we should have only one of them," Sitharaman said. "So this debate on the tax in the market, debate on securities transaction tax and also the question of treating all asset classes similarly has been a very well-discussed topic."

"It's healthy to have this debate, and I will be keenly hearing them," she added.

Also read: India should let rupee find its own level: Uday Kotak

Rupee Measures

Sitharaman attributed the "very significant" rupee depreciation over the last one and a half years to external challenges and global uncertainties.

RBI, over the weekend announced a slew of measures to stem rupee fall, including a special window for oil marketing companies that will take US dollar demand away from the spot market, and tightened rules governing forex derivatives trades to curb speculative bets against the rupee.

"So, these efforts from RBI...will continue - not to, as I said, fix the rupee. We would appreciate it if the rupee finds its own (level)," the minister said. India's macroeconomic fundamentals, including forex reserves, are strong, she added.

"I am sure there are efforts which RBI would further take to make sure the rupee doesn't become too volatile," Sitharaman said. "Within the country, we are making sure we keep macroeconomic fundamentals sound... As regards the rupee, and as regards the way it is reacting to the ups and downs with the dollar, yes, that's where the challenge is, and we will be attending to it."