After opening their day in the red, share markets in India continued their downtrend and ended today’s trading session deep in the red. Losses were seen across all sectors with stocks in the realty sector and stocks in the power sector leading the losses.

At the closing bell, the BSE Sensex stood lower by 840 points (down 2.3%) and the NSE Nifty closed down by 256 points (down 2.3%). The BSE Mid Cap index ended the day down 4%, while the BSE Small Cap index ended the day down by 4.7%.

Asian stock markets also, finished in red. As of the most recent closing prices, the Hang Seng was down by 0.12% and the Nikkei 225 was down by 0.90%. Meanwhile, European markets were also trading in the red. The FTSE was down by 0.34%. The DAX stood was down by 1.57%, while the CAC 40 was down by 1.36%.

The rupee was trading at Rs 64.00 against the US$ in the afternoon session.

In the Union Budget 2018 announced yesterday, Finance Minister Jaitley announced a long-term capital gains tax of 10% on sales of listed securities on gains over Rs 1 lakh. This came in as a surprise for the market. The market at the worse was expecting a change in the definition of long term capital gains.

Currently, sale of listed securities beyond a period of one year are exempt from taxation. The market was expecting this period of one year to be extended to two or three years.

However, as per the current proposal if you sell your equity within the period of one year, you would have to pay the usual 15% short term capital gain on your gains. For period beyond one year, you will have to pay a long-term capital gain of 10% without the benefit of indexation.

Nevertheless, the tax imposed is still lower than the short-term capital gains tax and a third of what you would pay if your earnings are in the highest tax bracket from any or all other sources.

Also, with the “grandfathering” that the government has allowed, the new levy should hurt less than previously thought. Put simply, this means there is no retrospective taxation.

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