Budget 2024: Hike In Capital Gains Tax Disappointing, Says Motilal Oswal's Raamdeo Agarwal

The Union Budget 2024–25 was expected to heavily favour the capital markets and Finance Minister Nirmala Sitharaman delivered on that promise on Tuesday, according to Raamdeo Agrawal, chairperson of Motilal Oswal Financial Services Ltd.

"I was a bit disappointed with the increase in long-term taxation," Agrawal told NDTV Profit. "This asset class deserves encouragement."

Flows into the systematic investment plans were increasing and since this is fundamentally a long-term narrative, the long-term capital gains tax should not have been raised from 10% to 12%, according to Agrawal.

The Motilal Oswal chairperson said the increase in consumption or the growth in gross domestic production was a complex concept influenced by various factors beyond changes in taxation.

Favourable monsoon, reports from the Reserve Bank of India indicating a rise in rural demand and other widespread benefits reaching the population will contribute to boosting consumption gradually over time, he said. "These factors collectively play significant roles in shaping economic growth and stability beyond fiscal policies alone."

Agrawal said there does not seem to be any significant impact on the market outlook. "The outlook remains unchanged from before the budget announcement."

He emphasised that long-term investors using the SIPs should continue their investment in the market and stay invested even if it experiences a correction next month. "It is perfectly a healthy environment for long-term investment."