Key Points
MUMBAI: The increase in short-term and long-term equity capital gains taxes and discontinuation of indexation benefits for property sales have reduced the regulatory arbitrage that other investments held over deposits, potentially drawing more future savers to traditional banking instruments...
Bankers expect more term deposits now with the disappearance of the arbitrage, likely helping lenders that are struggling to raise liabilities in line with asset expansion...
"Even if it does not lead to inflows into deposits, I think it will arrest any further outflows as savers will look at this avenue more closely," said Sanjay Mudaliar, executive director at Bank of Baroda..
In her budget speech on Tuesday, finance minister Nirmala Sitharaman proposed to hike the short-term capital gains tax on all listed equity instruments to 20% from 15%..
Moreover, the indexation benefit has also been removed from all the assets for computing long-term capital gains which will disallow any inflation adjustment, increasing the tax outgo..
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