Investor Expectations From Union Budget 2022

The Union Budget 2022 is expected to be presented to the nation on 1st February 2022.

With each passing day, the curiosity amongst everyone is growing by leaps and bounds.

And looking back at the strong comeback the stock market has made in the past year and a half, ever since that March 2020 crash, the investors are rising high on positive market sentiment. Naturally, they must have pinned high hopes from the upcoming Budget 2022 as well.

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So whether you are an existing investor or wish to become one soon, letĄ¯s have a look at some of the announcements that retail investors expect from Budget 2022.

1.Abolish LTCG Tax Of 10% On Equities Or Increase The Gain Exemption Limit

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The Long Term Capital Gains Tax on equity shares and equity-oriented mutual funds was introduced back in the Budget 2018. It levies a 10% LTCG tax on cumulative gains above ?1 lakh in a financial year on equity schemes, including tax-saving mutual funds (ELSS). For the uninitiated, long term refers to equity schemes held for 1 year or more.

Removal of this LTCG tax on equities is amongst the biggest expectations from retail investors. If not this, then at least the limit of ? 1lakh on tax-free gains limit should be increased. Such moves will certainly boost retail investor participation in equity investments.

Also Read: Frequently (Not) Asked Questions - How Much Tax Am I Paying On My Mutual Fund Investment?

2. Increase Tax Saving Limit For ELSS

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ELSS (Equity Linked Savings Scheme) is the only category of mutual funds that offer tax-saving benefits. Moreover, such tax-saving benefit of investments towards ELSS falls into the already congested Section 80C of the Income Tax Act, which includes a wide range of other tax deductions such as tax saver FD, home loanĄ¯s principal repayment, life insurance premium, etc.

Hence, to further promote the adoption of tax-saving mutual funds (ELSS), the government can either provide an altogether separate tax benefit limit for ELSS (Equity Linked Saving Scheme) by creating a new section for it or increase the overall limit of the heavily crowded Section 80C from the existing limit of ?1.5 lakh per year.

3. Remove STT On Equity Trading

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STT has been a pain point for equity traders for a long time. It was introduced in 2004. This securities transaction tax at the rate of 0.025%-0.25% is levied on equity trading, depending upon the type of security traded and transaction, whether sale or purchase.

With the LTCG and STCG already present, it becomes a strong case to abolish STT. This move can certainly encourage new investors to step into equity trading, boost capital market participation and add considerable value to the economy.

4. Reduce Lock-In Period Of Sovereign Gold Bonds (SGB)

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Also Read: 5 'Not So Known' Ways To Add The Glitter Of Gold To Your Portfolio in 2022

The Sovereign Gold Bond Scheme was launched by the government in November 2015, under Gold Monetisation Scheme. They involve a lock-in of 5 years, as, during the tenure of 8 years, the facility to avail the exit option is available in 5th, 6th and 7th years, on the interest payment dates.

Hence, lowering the lock-in period of SGBs can promote the fulfilment of the primary aim of SGBs, i.e. to shift domestic savings towards financial savings, by investing in these government securities in the form of SGBc instead of the traditional physical gold.

5. Clarity On Crypto industry

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Also Read; RBI In Favor Of A Complete Ban On Crypto, Says It's A Serious Concern For Them

The future of the cryptocurrency industry still remains cloudy. The much anticipated and awaited Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 is something all crypto investors are looking forward to, as that is what can offer a ray of hope and clarity on whether cryptocurrency will be banned or regulated in India.

Let's hope the government tables it during Budget 2022 or at least provides some inputs towards when it will be tabled.

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