'Baseless': Finance Ministry Denies Discussions On Capital Gains Tax

The Finance Ministry on Tuesday said that there is no such proposal before the government on capital gains tax and called the reports on tweaks in capital gains tax as ‘baseless’, reported ET Now.

Bloomberg had reported that people familiar with the matter had said India is planning to revamp its direct tax laws, which currently consist of a complex set of rules and help Prime Minister Narendra Modi reduce widening income inequality, if he returns to power next year.

The report noted that India currently imposes a tax rate of up to 30 per cent on income, but it applies a lower tax rate to gains from specific asset classes like equity funds and stocks.

According to the sources, said the report, this approach to taxation is not progressive and contradicts the principle of equity. To address this, a panel may be established to build on proposals presented to the Finance Ministry in 2019, with the goal of implementing changes in 2024, although no final decisions have been made yet.

Economists often attribute India's tendency to rely on indirect taxes, such as consumption taxes, rather than direct taxes on capital as the primary reason for the country's growing income inequality.

Between 2018 and 2022, India saw the emergence of 70 new millionaires every day.

According to Oxfam International, the top 10 per cent of India's population owns 77 per cent of the national wealth, and government data shows that only about 6 per cent of the population pay income tax.