The Finance Minister withdraw enhanced surcharge levied on long and short-term capital gains, introduced a transparent mechanism to end alleged tax harassment of businesses, tried to ease liquidity flow to make loans cheaper in order to boost consumer demand and also unveiled certain steps to boost demand for cars to address the slowdown in the auto mart.
Here is how a section of market participants and industry leaders reacted to these measures:-
Ashish Shanker, Head- Investment Advisory, M0tilal Oswal Private Wealth Management.
It is very heartening to hear the finance minister patiently address issues relating to capital markets and industry. This should help stir positivity and gradually bring back animal spirits. The steps taken to infuse liquidity in the banking and NBFC sector should help alleviate stress in the system and set in motion the recovery process ! Kudos to the finance ministry and the entire team
Garima Kapoor, Economist, Elara Capital
The main takeaway of today’s announcements by the Finance Minister is that they are aimed at restoring confidence and tackle the challenges of weak demand. Measures that aim at accelerating the payment of dues of government to private sector entities, ensuring timely refund of GST refunds to MSMEs would in particularly help to resolve the liquidity crisis in the economy. Withdrawal of surcharge on FPIs and domestic investors would help in alleviating the tax burden on investors in capital markets. Likewise, quicker transmission of rate cuts, faster recapitalisation of banks and external benchmarking of rates are likely to aid credit off take. Most importantly, recognition of issues in the economy and the measures to address them is itself a positive signal and will help to ease concerns on growth slowdown.
SR Patnaik, Partner & Head – Taxation, Cyril Amarchand Mangaldas
Acknowledging to the widespread criticism faced by the tax authorities for their enthusiasm to tax start-ups, the Government has finally decided to put a full stop to it. It is a widely expected move and with an impending slowdown looming over the industry, the Government has decided to absolve start-ups from being harassed by the tax authorities. Today’s decision means that once you are registered as a start-up with the DPIIT, you will not be bothered by the tax authorities. The FM has also assured the industry that tax authorities will not “overreach “. This is a very welcome statement and should provide a lot of comfort to the industry. A number of other steps were announced by the FM with an assurance that more steps shall be announced next week, she seems to have provided the soothing balm that the industry was looking for.
Vinod Nair, Head Of Research, Geojit Financial Services:
FPIs were selling given the risk-off mode in the global market which had enhanced in India due to higher surcharge post budget. They have sold about ~Rs28,000cr since the date which can be reversed to a good level in culmination of other supportive measures like recapitalization of PSBs, transmission of rate cut and Auto. This is likely to restore some confidence in the market..
Rusmik Oza, Head of Fundamental Research, Kotak securities
Withdrawal of enhanced surcharge on FPI, is a big positive for Indian markets as it could reverse the outflows seen since post budget. It should also help INR appreciation. Overall a good sentiment booster for Indian economy.
VK Vijayakumar Chief Investment Strategist, Geojit Financial Services
Withdrawal of the surcharge on FPIs is a shot in the arm for the sagging market. One can now expect reversal of the FPI selling. The market is likely to look up from now on. However, sustained rally in the market will happen only when we have visibility on good earnings growth and reversal of the slowdown under way in the economy. This requires more reforms. The FM has announced that she will come back with more reforms soon. So, there is hope.
Prayesh Jain, Executive Vice President, YES Securities
Announcements from have potential to boost short-term sentiment. The MSME measures can help the dealers to mitigate their financial stress. Depreciation benefits can provide boost to CV demand to a certain extent but ground realities of weak economic environment needs to change for a tectonic shift in demand.
Bhavin Shah, Partner & Leader, FS Tax, PwC India
FM announced removal of higher surcharge on capital gains for FPIs. Her presentation suggested amendment in respect of capital gains taxable under Sections 111A and 112A. FPIs are, however, taxable under a different section 115AD. Hope fineprint makes amendment in correct section. The removal of higher surcharge on capital gains will not apply to AIFs, which deal in derivative securities where the characterisation of income is business income.
Industry, market leaders say kudos to FM for active steps to pump-prime economy – Economic Times