With a view to deepening tax base in the country, Finance Minister Nirmala Sitharaman proposed to increase Securities Transaction Tax (STT) on Futures and Options contracts to 0.2% and 0.1%, respectively.  The measure is viewed as one to curb speculation in the stock market.

In another measure, income received on buyback of shares by companies from shareholders would now be taxed in the hands of the recipient. This is also viewed as a negative for retail investors.  As per the Budget proposal, unlisted bonds and debentures, debt mutual funds and market-linked debentures will now attract tax on capital gains irrespective of the holding period.

In a bid to simplify capital gains taxation, the FM said short-term gains on some financial assets will now attract 20% tax as compared with 15% previously, while those on all other assets will continue to attract the current rates. For benefiting lower and middle income classes, the FM has proposed to increase the limit of exemption on some financial instruments for capital gains to ₹1.25 lakh a year.

The other major proposals in the Finance Bill relate to withdrawal of an equalisation levy of 2%, expansion of tax benefits to certain funds and entities in the International Financial Services Centre, Gujarat, and changes to the Benami Transaction Act enforcement.