Going by the buzz on Dalal Street, here are five factors that hurt market sentiment:
Lack of sectoral sops
The Budget didn't have specific sops for any sector, be it auto or real estate, as widely expected to create demand in the economy and lift it out of the current slowdown. Vinod Nair, Head of Research at Geojit Financial Services, rated the Budget ‘below par’ considering that the market had very high expectations from the government. The support for the economy in terms of more spending was lacking in details, he said.
Income-tax slab confusion
There was some disappointment over the removal of all the exemptions under Section 80C. Also, by giving the option to choose between old and new income-tax formats, things have got more complicated, analysts said. "While a new tax regime with lower tax rates has been introduced, the removal of all exemptions, including Section 80C exemptions, will water down its benefits. On top of it, the option to choose between the old or new income-tax regimes will complicate filing tax returns, which was already a complicated process for individual taxpayers,” said Ankur Choudhary, Co-Founder & CIO, Goalwise.com, a direct mutual fund investment platform.
No LTCG revisit
The market was largely expecting the Finance Minister to make some tweaks to long-term capital gains tax (LTCG). But there was no such announcement. Investors were expecting the government to either abolish the tax for equities or extend the tenure to two years from one at present. The government re-introduced LTCG in 2018 after a gap of 14 years. Analysts said it has caused significant confusion without yielding meaningful increase in tax collection.
Divestment targets a bit too high
Given that even this year’s divestment proceeds will be much less than the Budget target of Rs 1.05 lakh crore, the Rs 2.10 lakh crore target for FY21 a bit too high, even if one includes the LIC stake sale. "LIC IPO might have been been factored in, as the strategic divestment figures cannot go up so much,” said Rushmik Oza of Kotak Securities.
Higher dividend tax on recipient
Finance Minister Sitharaman announced the abolition of dividend distribution tax (DDT), which will lead to a Rs 25,000 crore in revenue foregone. But dividends will now be taxed in the hands of recipients. Amar Ambani, Senior President and Research Head at YES Securities, said taxation of DDT in hands of investors at their I-T slab rates is a negative move for domestic investors.
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