Stocks cheer finance minister's openness to debate over securities transaction tax

Stocks jumped on Tuesday after finance minister Nirmala Sitharaman said she’s keen to listen to discussions around a transaction tax imposed on trading shares as the country seeks to boost capital inflows.

“There’s a lot of debate” over the tax commonly known as the securities transaction tax, she said at the Bloomberg New Economy Forum in New Delhi, declining to be specific as she prepares for the federal 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 what I will not consider,” she said. “It’s healthy to have this debate, and I will be keenly hearing them.”

Sitharaman further said that the long-term capital gains tax is something on which a lot of people have been commenting, and the issue also came up during her conversation with investors in India and abroad.

The Nifty 50 Index extended gains as the minister spoke, closing 1.6 per cent higher at 22721.95 on Tuesday, its biggest advance in more than two months.

The 30-share BSE Sensex jumped 1109.10 points, or 1.54 per cent, to settle near the day’s high at 73033.78, posting its best single-day gains in four months. During the day, it surged 1120.99 points, or 1.55 per cent, to hit a high of 73045.67.

STT, along with the capital gains levy, are seen as a “burden” for both local and foreign investors, said Nilesh Shah, managing director of Kotak Mahindra Asset Management.

“This dual taxation has been a concern for investors, and we need to find the right balance,” he said. “I am glad that the honourable finance minister is listening to the market’s suggestions, and I hope appropriate action will be taken soon.”