Budget 2024: Bloodbath on D-Street after Sitharaman's capital gains tax move; Sensex, Nifty down over 1%

Both of India’s benchmark stock indices crashed after Financ Minister Nirmala Sitharaman announced changes to the long-term capital gains tax (LTCG) and short-term capital gains tax (STCG). Both Sensex and Nifty were down over one per cent.

Sensex today

Around 12:30 pm, the 30-share Sensex index had shed 1189.09 points, or 1.48 per cent, and lost the psychologically-important 80,000 mark. It stood at 79,312.99 points. It was hovering only slightly above the intraday low of 79,224.32.

Power Grid, Larsen and Toubro, Tata Motors, Tata Steel, and SBI’s shares were the top laggards at this time.

Nifty 50 today

The broader Nifty 50 index had taken a stronger hit than Sensex. At 12:30 pm, the index was down nearly 2 per cent, having tumbled 382.25 points. It stood at 24,127 points. Shares of ONGC, Larsen and Toubro, Shriram Finance, Hindalco, and Power grid were the top losers in the Nifty pack.

Changes in capital gains tax

Short term gains on certain financial assets will now attract a tax rate of 20 per cent, while that on all other financial assets and all non-financial assets shall remain unchanged. Long term gains on all financial and non-financial assets, on the other hand, will attract a tax rate of 12.5 per cent.

Outlook for the future

Vaibhav Porwal, Co-founder, Dezerv said that the recent changes in Budget 2024 regarding the changes in capital gains tax signal a significant shift. “While the market’s initial reaction may seem bearish, we believe these changes will ultimately foster a more stable and mature investment environment.”

He said that the widening gap between STCG and LTCG rates is a clear incentive for longer-term holdings. “This move is also a step towards standardising taxation across various asset classes, potentially simplifying the investment decision-making process for many.”