Since the Indian benchmark indices have fallen by over 1% and closed at a one-month low level, the capital markets regulator, Securities and Exchange Board of India (SEBI) chief Ajay Tyagi has said that the volatility in the Indian equity markets may continue for some time. He explained that the global factors are mainly responsible for the volatility in the Indian markets, and outweighs the concerns related to long-term capital gains tax (LTCG). He also said that there are no issues of concern for investors in terms of safety and security of the Indian marketplace.
On the matter of re-introduction of LTCG tax as proposed in the Budget, Tyagi said that SEBI has not received any representation from investors so far against this. He admitted that the tax would impact the market and also said that it will be wrong to say LTCG will have no impact at all on Indian markets, but any such impact would be small and global factors pose bigger risks. About the timing of imposing the LTCG, he said it was an opportune time as markets were booming.
SEBI chief further said that small investors need not panic since they are doing well to invest via Mutual Funds. But, he pointed out that they cannot be as risk-free as bank deposits. He added that the market regulator is also set to come out with norms on corporate bonds to encourage firms to tap this route for fund raising. Besides, Finance Minister Arun Jaitley, on February 1, proposed to tax LTCG on equities exceeding Rs 1 lakh at 10%, which is expected to bring in a revenue of Rs Rs 20,000 crore.