Nirmala Sitharaman Dismisses Unverified Tax Change Reports

Finance Minister Nirmala Sitharaman has denied reports suggesting major tax changes by the new government after the Lok Sabha election results. She clarified on social media that these reports were pure speculation and had not been confirmed by the Finance Ministry.

The reports had suggested that the incoming government might introduce alterations to the existing tax slabs and explore alternatives to prevent tax base erosion. It was also rumoured that the income tax department might implement uniform capital gains tax rates across all asset classes. Currently, different tax structures are in place for various financial assets.

Following these reports, the 30-share BSE benchmark Sensex experienced a sharp decline of 1,100 points due to market uncertainty. The India VIX, which measures market volatility, dropped by nearly nine percent, reflecting nervousness among investors.

The overall market capitalization of BSE-listed firms decreased from nearly ₹408.5 lakh crore to around ₹406.2 lakh crore in a single session. It resulted in investors losing about ₹2.3 lakh crore. The Sensex closed with a loss of 733 points, or 0.98 percent, at 73,878.15.

The selloff impacted various sectors, with the financial regulations facing declines, as evidenced by the 0.21 percent drop in the BSE Midcap index and the 0.55 percent decline in the Smallcap index.

The new government, which will take office after June 4, is scheduled to hold the main budget session in July 2024. Earlier, in February, the finance minister had stated that the Interim Budget did not include revisions to tax rebates or tax slab adjustments. She emphasised that such changes were not appropriate for an Interim Budget and would be considered during the main budget session.