Is investing in Indian share market still worth it after re-introduction of LTCG Tax?

I’m interested to know if investing in stocks is still profitable as the long-term capital gain tax of 10% has been re-introduced in the budget 2018.

First of all, I would admit that the LTCG tax is definitely going to hurt the investors.

Given an option, zero tax will be always preferred. However, the reality is that we don’t have an option and everyone has to accept it. Tax implementation is decided by the government and we cannot control it.

Here’s the what announced regarding the LTCG tax in budget 2018:

LTCG Tax on the sale of equity or mutual funds after one year will be taxed 10% of the total gain that exceeds 1 lakh rupees.

Now, even though LTCG Tax is re-introduced (after one and half decade), still equity is the best bet for retail investors in the long run.

Moreover, just to mention, you do not have to pay any tax up to a capital gain of INR 1 lakh while investing for long term. (Don’t know why most people ignore this fact?) If you are an average Indian investor, this is a good amount which you can save.

Besides, the LTCG Tax is just 10% of the amount exceeding Rs 1 lakh. Rest gains will still be yours. And historically speaking, equity investment has given better returns than most other savings and investment options (like gold, commodities etc).

Overall, yes, it is still profitable to invest in the Indian stock market.

Quick Note: Although investing in stocks is still profitable, however, you might need to re-adjust your investing strategy (according to your investment goal). What I mean here is that you will get 10% less on your final amount now. Therefore, to reach the same goal, you might have to increase your initial invested amount ‘a little’.

I hope it helps. #HappyInvesting.

The long-term capital gain or loss amount is determined by the difference in value between the sale price and the purchase price. Long-term capital gains are taxed at a lower rate, which as of 2019 ranged from 0 to 20 percent, depending on the tax bracket