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Impact of budget 2020 on the stock market


There have been a lot of key measures in the budget speech of 2020 given by the finance minister that help to boost the investment and stimulate the growth of the market. The Indian stock market performed relatively good in the year 2019 and the benchmark indices which are Sensex and nifty had hit high records which were over 13% and 11% respectively. The budget had focused on boosting the sentiments of investors by the way of reducing the income tax and increasing the cash in hand of the common man. The policies of the government regarding the personal income tax will also be modulated to achieve these goals.


 The most common thing which was expected was some rationalization of capital gains tax. The market had great hopes from the union budget and the growth was expected for all the industries which could boost the rural market consumption. There has been an introduction of such a system that the taxpayers can choose to remain at existing tax slab and can also claim for the deductions or they can move to a new regime where there will be lower rates of taxes but are there will be no deductions. One can also rely on the Indian share market news provided by the business standard to have the latest updates.


 Following are some of the things that have helped the investors a lot:


  1. Abolishing the long-term capital gain tax: this tax is a great and long-pending demand from the investors which can highly hell improve the market sentiments. Through the 2020 budget, the governments are considering some kind of rationalization for the long-term capital gain tax by classifying the asset classes of all kinds. The holding period for such gains is also expected to increase to 2 years which was one year earlier.


  1. Reducing the securities transaction tax: the security transaction tax is the biggest burden on the investors as it can contribute a large part to the trade transaction cost. This was introduced in the year 2004 and is levied on every purchase or sale of securities which are listed. Earlier there was a change that STT was restricted to the difference between the strike price and the settlement price while exercising the options. But this change has not much affected the whole thing. Some experts are of the view that when such taxes are levied in India it leads to double taxation. The main reason behind this is imposing the long-term capital gains tax and keeping the STT constant. In case the government wants to increase the securities and investment then it must remove the STT to ensure that more and more people participate from both domestic as well as international markets.


  1. Benefits for retail investors: the union budget also comes up with the forms that can help the retail investors and the government is already planning to extend these benefits in form of tax benefits to the retail investors. The next year budget can also offer an incentive in the form of health insurance as there will be an exemption on health insurance premium for the health insurance buyers.


  1. There will be no pressure to buy the tax savers: in case one goes with the option of moving to the new regime then there will be no pressure to avail the tax deductions by buying insurance and investment products. This is a very great option for all those people who have lower incomes of 1
    0, 00,000 and less and the people who feel the stress of increasing the costs of living as well.


  1. There will be proper freedom to buy regular investments: all the investments are not done to save the tax. Many mutual fund investments don’t provide any kind of tax deduction. In case one goes with the new option then one is free to invest and ensure without the burden of hit the exemption limits under section 80 C of the income tax act. One can invest simply so that one can achieve the goal of wealth maximization and this will help to have better investment choices side-by-side avoiding the tax-saving investments.


  1. One must take stock of existing insurance commitments and investments: in case one is already committed to the plans of insurance or one has a home loan which is to be repaid then there are several deductions for which one is eligible. One can avail the deduction of rupees 1.5,00,00 under the section 80 C, Rs.2,00,00 for a home loan under the section 24 B and Rs.50,000 for health insurance under the section 80 D. In this way one can have the total reduction of Rs.4, 00, 000 which can leave a great impact on the tax outgo structure.


  1. Never go with the option of no insurance: In case one goes with the new option then there will be no burden to buy health insurance products. Insurance is the main instrument to provide the financial safety of the whole family. In case one has no such plan then the dependence of the family will have to face serious consequences. Without health insurance, a single hospitalization can lead to finishing all the savings of the family. Another benefit of the insurances they provide tax deduction which is the great factor that can influence their buying behaviour.


 From this budget, the users have a great responsibility to choose from two options very carefully and one must use the tax Calculator and can also rely on today’s stock market news from the sources like Business Standard which provide the most reliable information based upon which various financial decisions can be made. One must do proper and adequate research before going with any single option. The business standard also provides an app which can be downloaded by the users and helps to notify them about the latest trends and news going on in the market which can help to make various informed decisions which can provide great returns on the investment of the investor.