'Budget may not be right time to restructure capital gains tax'

The new alternative tax regime should be incentivised to encourage more taxpayers to adopt it, says Revenue Secretary TARUN BAJAJ in an interview with Shrimi Choudhary. Bajaj, who superannuates today, suggests this could be done by raising the lower tax slab up to ₹7-7.5 lakh, from the current ₹2.5 lakh. He also stresses that restructuring the capital gains tax regime requires detailed consultation and the run-up to the Budget may not be the right time to do this. 

Restructuring the capital gains tax regime is back on the table. What are the key issues that need to be revisited?

There's no need for having so many buckets under the capital gains tax structure, or so many different permutations and combinations. We need to simplify that. The current tax structure creates a tax arbitrage between products (asset classes). So, investments are being made in an asset class on the basis of tax advantages, and not on the basis of how good that asset class is. I believe an asset class should sell on its own strength, rather than only on the basis of tax advantage. That is the whole point one is trying to address.

In the past, whenever there were tweaks in tax-related policies, especially during Budget time, it did not go down well with stakeholders. Do you think we could see some changes in the upcoming Union Budget?

Whatever changes you make, some stakeholders will be adversely affected; even if 90 are positively affected, 10 will be adversely affected. So there will be some noise. But I think there needs to be a greater debate and more stakeholder discussions on this as to what should be done. Budget may not be the right time as industry expects a lot during the period. So, you're not able to have a very healthy discussion. That is why I had raked up this issue after the Budget, so that people didn't have so much emotional stake in the arguments.

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