As soon as Finance Minister Nirmala Sitharaman presented the first budget of the third term of the Modi government in the House, there was a tsunami in the share market and the Sensex plunged 1500 points. After all, what was the reason behind this decline? What happened that caused both Sensex and Nifty to crash? During the budget, Nifty saw a decline of 435 points, and this index slipped to 24,074.20. However, later the market calmed down and the Sensex closed at 80,429.04 with a slight fall of 73 points.
1. Increase in long term capital gains
While presenting the Union Budget in the Lok Sabha, the Finance Minister increased the Long Term Capital Gain (LTCG) tax from 10 percent to 12.5 percent, although those who invest for the long term have definitely got some relief. In this budget, the exemption limit on investment has now been increased from Rs 1 lakh to Rs 1.25 lakh.
2. Short Term Capital Gain
The biggest blow to the stock market came when the Finance Minister increased the tax on short-term capital gains from 15 percent to 20 percent during the budget. This change will be applicable to equity sold before 12 months. After this change the market declined rapidly. However, this change will be applicable on selected assets.
3. Futures and Options Trading
Finance Minister Nirmala Sitharaman has increased the STT future and option trading tax in this general budget. This increase has been made from 0.02 percent to 0.1 percent respectively. The effect of which was seen in the Indian stock market. Apart from this, while presenting the budget in the House on buyback share taxation, Nirmala Sitharaman said that tax will be imposed on it.
4. Silence on disinvestment
People were expecting that the government would set a target for disinvestment in Mazagon Dock Limited, GRSE, IDBI Bank in this financial year or there would be some big announcement. But this did not happen and its effect was visible in the market. During the budget itself, the shares of these companies started falling and they fell by 8 percent.
5. Income tax is not a big change
Tax paying people had a lot of expectations from this budget. It was being speculated that there would be a major change in the income tax slab, but when the budget was presented, people’s expectations were shocked because the government did not make any major changes in the new tax regime except increasing the limit of standard deduction from Rs 50,000 to Rs 75,000. did not do.
6. No major announcement regarding PSU
Selling pressure was not seen in the recent multibagger sectors like Defence, Railways and PSU, as there were no announcements related to these sectors and a decline was seen in the shares of many companies including Hindustan Aeronautics Limited, Rail Vikas Nigam Limited.