Page 57 - Banking Finance June 2025

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Long-term capital gains tax is a bad

idea: Arora

L evying capital gains tax on those who invest in India, are young and have just begun investing as they have seen
especially the foreign investors, is a bad idea, and is
such a phase right at the start. They should hope that the
markets should be cheap when they begin their investing
possibly the Central government's "biggest mistake,"
said Samir Arora, founder and chief investment officer of Helios journey so that they can buy more and stay put for long.
Capital at the Business Standard Manthan Summit 2025.
"Now, they can buy more units / shares and stay put for
Capital gains tax, he added, is especially souring sentiment long. On the contrary, those who were nearing retirement
for foreign investors who have been on an unabated selling and wanted to withdraw have been hit hard as their
spree for five months. In the last couple of months alone, withdrawable corpus has shrunk," he said.
foreign institutional investors (FIIs) have dumped Indian Though it is always difficult to predict when the markets will
equities worth over Rs 1 trillion.
bottom out, Arora believes typically markets tend to bottom
"The biggest mistake they (the government) have made, the out after eight - nine months and then enter a consolidation
biggest souring of sentiment, and reality which they have phase for the next three - four months before staging a
to accept is capital gains tax in India, particularly the foreign recovery.
investors, is 100 per cent wrong," Arora said.
"We are in a period of high uncertainty. That said, we are
Adding: "The largest investors in the world and in India are in the end game somewhere. In the next few months, a few
Foreign Sovereign Funds, Pension Funds, Universities, and the things should coincide. By April / May, (time-wise) it would
High Net worth Individuals (HNIs).
be around eight months since the fall started, which is
Taxing them on their gains, especially when they have no equivalent to the time period of the fall / correction seen
tax set-off available in their home country and when they earlier. Also, by then there would be some clarity regarding
face forex-related risks, is a big mistake that the government the Trump-related tariff negotiations and how the corporate
is making." earnings will play out in the year ahead," Arora said.
Arora, who has been investing in the markets for over three From an overall perspective, the first six months of calendar
decades, said India collected around $10-11 billion dollars year 2025 (CY25), Arora said, will be about capital
as capital gains tax in 2022-23 (FY23).
preservation for investors. As a strategy, Arora is sitting on
"India, however, should waive the capital gains tax to the sidelines for now.
respect the markets and foreign investors," he said.
"The shopping basket has been deferred indefinitely. I want
As regards fundamentals, Arora believes that the corporate to buy but not right now, as there is too much uncertainty,"
earnings growth, excluding commodities, back home was Arora said.
around 13 per cent, which is not as bad as perceived by the
markets. The recent market fall, he said, has not only been His boldest investment bet in the last 12 - 18 months has
due to a reaction to corporate earnings growth, but a mix been Zomato, while the missed opportunity has been
of other global and domestic issues. shorting high-value stocks. The safest investment, which he
thinks has been a good contra bet, has been staying put in
Young turks HDFC Bank stock at a time most analysts expected the stock
The fall in the markets, Arora believes, is good for those who to slip. (Source: Business Standard)

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