In what could ring alarm bells for the capital markets, Prime Minister Narendra Modi has hinted at more taxes on capital markets. While the details were not dwelt upon, Mr. Modi was of the view that stock market traders were not paying taxes in proportion to the profits that were making in the equity markets. This could either mean an increase in the rate of short term capital gains tax or imposition of tax on long term capital gains. Currently, short term gains are taxed at 15% while long term gains are tax-free. It remains to be seen if this also coincides with the abolition of STT.
The Finance Minister, Arun Jaitley, conceded that while there was broad consensus on the Central GST and the State GST, the issue of dual control was still unresolved. The GST Council will again be meeting in January to sort out this issue. The dual control issue needs to be sorted out on an urgent basis as the bills need to be passed in the Budget session. Even if that happens, implementation effective April 01st 2017 is very unlikely as the corporate readiness for GST implementation in terms of compliance set up, IT facilitation etc is not yet there.
