It's great fun to see FinMin turning nervous or fearful. The BSE Sensex has fallen about 6% from its life high of 36,283.25 in two weeks. Mid-caps and small caps peaked two weeks before the Sensex on 15 January and from there, they have fallen 9%.
These numbers aren't alarming and that's why FinMin legal pundit, power mechanists, and tax handlers are only nervous or fearful but not frightened yet out of shape.
But what if a 10% correction takes place and pulls down the Sensex to 32,650? What if a 20% fall takes down the Sensex to 29,000?
The PMO may start questioning FinMin smarties about the necessity of putting their hands in the pockets of middle-class investors, even if it might have acquiesced in imposing the so-called 'modest' rate.
Look at the rationale, or irrationality, of imposing a 10% LTCG tax on gains of Rs one lakh and above.
In his Budget speech, Arun Jaitley asserted that a major part of the gain (LTCG) has accrued to corporates and LLPs, which has created a bias against manufacturing, leading to more business surpluses being invested in financial assets. The return on investment in equity is already "quite attractive even without tax exemption" and therefore there is a strong case for bringing long-term capital gains from equities in the tax net, he added.
Really?
Do corporates and LLPs make only one lakh, two lakh, 10 lakh, or 20 lakh gains on their equity investments? Or is it the astute middle-class investors who make this kind of petty and small long-term gains, which they then plow into the education of their children or fund their emergency requirements?
The threshold of Rs one lakh gain gives away Jaitley game against the middle class - very much like his illustrious/notorious predecessor P Chidambaram who also suffered from the pathological habit of putting his hand in the pocket of the middle classes to feed the requirements of his corporate cronies. Of course, PC was the one who did away with the LTCG in 2014, but he did it not for the sake of the middle classes but for helping his FPI friends and the middle classes became collateral beneficiaries.
Taking a cue from his minister, Revenue Secretary Hasmukh Adhia stretched the FinMin excuse to a higher level of grandstanding.
He said: "This is the first year when we started asking for reports on this (LTCG). We have got startling Rs 3.76 lakh crore being reported as exempted income. Isn't that too much? Just imagine you as the salaried class would have earned this much income, you pay 30% tax for your toil. "And here is a return on simple investment. You have money, you put in stock and you make a capital gain and then you pay no tax".
Look at the choice of words: salaried class, simple investment, etc. Who is he fooling?
Like his master Jaitley, he gives away the game. He knows that it's the salaried class that has been parking its hard-earned savings into the stock market to save their value from the erosion of inflation and to meet their old-age requirements and family obligations like education and marriage of children.
And does Adhia really think that an investment in stock market is as simple as he has made out? Doesn't he know that it requires great mathematical ability - and not the arithmetical ability of his department, besides researching and risk-taking, to make some money in the stock market?
He should have at least consulted Amit Shah or Piyush Goel before uttering his gospel on the stock market investment.
Dear Jaitley and Adhia, be happy in your world of make believe!
The real world is beginning to exploit the velocity of your deed.
There is a real probability of your massive divestment plans including that of Air India dying on the drawing table.
If the stock market crashes by 20-30% in days to come.
Much of the income of the middle classes made over the past couple of years would crash.
It would create a terrible pre-2019 election atmosphere.
But nothing would happen to foreign and
FinMin Humpty Dumpty to have a big fall
By IndianMandarins - 2018-02-11 07:08:42
It's great fun to see FinMin turning nervous or fearful. The BSE Sensex has fallen about 6% from its life high of 36,283.25 in two weeks. Mid-caps and small caps peaked two weeks before the Sensex on 15 January and from there, they have fallen 9%.
These numbers aren't alarming and that's why FinMin legal pundit, power mechanists, and tax handlers are only nervous or fearful but not frightened yet out of shape.
But what if a 10% correction takes place and pulls down the Sensex to 32,650? What if a 20% fall takes down the Sensex to 29,000?
The PMO may start questioning FinMin smarties about the necessity of putting their hands in the pockets of middle-class investors, even if it might have acquiesced in imposing the so-called 'modest' rate.
Look at the rationale, or irrationality, of imposing a 10% LTCG tax on gains of Rs one lakh and above.
In his Budget speech, Arun Jaitley asserted that a major part of the gain (LTCG) has accrued to corporates and LLPs, which has created a bias against manufacturing, leading to more business surpluses being invested in financial assets. The return on investment in equity is already "quite attractive even without tax exemption" and therefore there is a strong case for bringing long-term capital gains from equities in the tax net, he added.
Really?
Do corporates and LLPs make only one lakh, two lakh, 10 lakh, or 20 lakh gains on their equity investments? Or is it the astute middle-class investors who make this kind of petty and small long-term gains, which they then plow into the education of their children or fund their emergency requirements?
The threshold of Rs one lakh gain gives away Jaitley game against the middle class - very much like his illustrious/notorious predecessor P Chidambaram who also suffered from the pathological habit of putting his hand in the pocket of the middle classes to feed the requirements of his corporate cronies. Of course, PC was the one who did away with the LTCG in 2014, but he did it not for the sake of the middle classes but for helping his FPI friends and the middle classes became collateral beneficiaries.
Taking a cue from his minister, Revenue Secretary Hasmukh Adhia stretched the FinMin excuse to a higher level of grandstanding.
He said: "This is the first year when we started asking for reports on this (LTCG). We have got startling Rs 3.76 lakh crore being reported as exempted income. Isn't that too much? Just imagine you as the salaried class would have earned this much income, you pay 30% tax for your toil. "And here is a return on simple investment. You have money, you put in stock and you make a capital gain and then you pay no tax".
Look at the choice of words: salaried class, simple investment, etc. Who is he fooling?
Like his master Jaitley, he gives away the game. He knows that it's the salaried class that has been parking its hard-earned savings into the stock market to save their value from the erosion of inflation and to meet their old-age requirements and family obligations like education and marriage of children.
And does Adhia really think that an investment in stock market is as simple as he has made out? Doesn't he know that it requires great mathematical ability - and not the arithmetical ability of his department, besides researching and risk-taking, to make some money in the stock market?
He should have at least consulted Amit Shah or Piyush Goel before uttering his gospel on the stock market investment.
Dear Jaitley and Adhia, be happy in your world of make believe!
The real world is beginning to exploit the velocity of your deed.
There is a real probability of your massive divestment plans including that of Air India dying on the drawing table.
If the stock market crashes by 20-30% in days to come.
Much of the income of the middle classes made over the past couple of years would crash.
It would create a terrible pre-2019 election atmosphere.
But nothing would happen to foreign and 
