Stories
Cut STT And Capital Gains Tax To Boost Market Sentiment: Gurmeet Chadha
- •Gurmeet Chadha highlights a disconnect between the booming Indian stock market and strong real-economy indicators, calling for lower taxes to improve sentiment.
- •Q1FY27 data shows robust economic resilience with Nifty 500 revenue growing over 20 percent and profit after tax rising 21 percent.
- •Equities face severe supply pressure from FPI selling and disappearing arbitrage trades, causing losses for investors and shifting benefits to high-frequency traders.
- •Chadha recommends rationalizing the securities transaction tax and reducing long-term capital gains tax to restore arbitrage and boost market confidence.
- •Regulatory and tax changes regarding dividends, buybacks, and cash market adjustments need a phased approach to prevent shocks to private equity and market stability.
Key Questions Answered
Gurmeet Chadha suggests lowering taxes, such as rationalizing the securities transaction tax (STT) back to previous budget levels and reducing the long-term capital gains (LTCG) tax. He also advocates for phasing in regulatory reforms and easing dividend and buyback tax structures to reduce equity supply pressure.
During the April-June quarter of 2026 (Q1FY27), Nifty 500 revenue grew by more than 20 percent, and profit after tax (PAT) rose by 21 percent. Furthermore, September auto sales reached a record 25.4 lakh units, and retail commercial vehicle sales hit one lakh units for the first time.
Arbitrage is rapidly disappearing because buying the Nifty and selling it in the future results in a loss of ₹15 to ₹16, a shift that primarily benefits high-frequency traders. Additionally, FPI selling and recent cash market adjustments between 3:15 pm and 3:30 pm have created supply pressure and hindered price discovery.
