Amid controversy over Finance Secretary Hasmukh Adhia's statement on long-term investment involving no effort, the Ministry of Finance clarified that the top bureaucrat had been misquoted.
The allegation comes after the Finance Secretary's interview with The Times of India, where he stated that capital gains did not accrue from any effort, but are investment gains.
The same was highlighted by Member of Parliament, Rajeev Chandrasekhar, who tweeted, "Dear Hasmukh Adhia, the government is justified in levying long-term capital gains for resources. But you're wrong in signaling to the world that long-term investing involves no "effort". There's a difference between speculative trading and long-term value investing. There's a lot of "effort" in the latter."
Following this, a top Finance Ministry official, while clarifying to ANI, said, "The Finance Secretary meant to say that the effort put in by a salaried employee in earning his monthly living is slightly higher than the efforts involved in investing in long-term capital gains (LTCG), as it is a massive effort. However, even the money invested is hard-earned."
Earlier, Adhia, in his interview to the leading daily had explained the government's rationale behind the levy of taxes on LTCG in the Union Budget 2018-19.
"It's not a good idea to have a completely different, and sweet, dispensation for one type of capital gain compared to the others. This tends to skew investment and people prefer an option where there is no tax. The finance minister mentioned Rs 3.67 lakh crore capital gains accrued last year. Suppose this was the salary income of people, it would have been taxed at 20 or 30 percent. This is again, which is not accruing from any effort but is just an investment gain. It is only reasonable that we look to get some revenue from this class of income," he said.
For the unversed, Finance Minister Arun Jaitley, while presenting this year's Union Budget, introduced LTCG tax, whereby 10 percent tax will be levied on profit exceeding Rs. 1 lakh made from the sale of shares or equity mutual fund schemes held for over one year.