‘Govt Doesn’t Want More Money, Taxes Increased Because…’: FM Sitharaman Responds To Tax Hike Uproar

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Budget 2024: Finance Minister Nirmala Sitharaman in a post-Budget discussion explained that the government has decided to increase taxes not because it wants more money but to ensure uniformity and treat every asset class similarly. 

FM Sitharaman was responding to a hike in the Short Term Capital Gains and Long Term Capital Gain taxes, which drew criticism from many quarters. However, FM Sitharaman defended the move.

“Taxes have not been increased because I want more money… The decision is based on the idea that every asset class has to be treated similarly," said Sitharaman. She also clarified that the decision not to increase taxes wasn’t made with 'a back of the envelope calculation' or because the government simply wants more money.

The budget 2024 brought changes to the capital gains tax structure. The tax rate for long-term capital gains (LTCG) on equity has been increased from 10 per cent to 12.5 per cent. Further, the exemption limit for LTCG has been raised from 1 lakh to 1.25 lakh which will offer some relief to investors. Short-term capital gains on equity are now taxed at a higher rate of 20 per cent, up from the previous 15 per cent.