The domestic market saw a healthy increase in the number of investors in 2022, despite market volatility brought on by a number of challenges, such as rate hikes, sluggish economic development, and geopolitical concerns.
According to BSE data, the number of registered investors increased by more than 32% year over year (YoY) in 2022. The results showed that not just large states, but even small states, were becoming more aware of investing in the equity market.
The Union Budget 2023, which was presented by Finance Minister Nirmala Sitharaman on Wednesday, has introduced various measures that are beneficial for individuals to invest more in the markets in order to maintain the optimistic mood and inspire new investors. Let's take a look at them.
Reclaiming of shares and dividends
An integrated IT site will be built to make it simple for investors to reclaim unclaimed shares and unpaid dividends from the Investor Education and Protection Fund Authority.
Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, were made public by the Ministry of Corporate Affairs (MCA). All companies are required to identify and report unclaimed dividends as defined by this rule. This rule covers dividends both when they are transferred and when they are reimbursed.
Basically, dividends that were not paid by the payout date are referred to as unpaid dividends. Unclaimed dividends are paid by the company to shareholders who have not yet accepted or claimed them. The company is accountable for it and pays it when asked.
Capacity building in securities market
To increase financial literacy and equip people to manage their savings wisely, investor education programmes are crucial. Hence, norms and standards for education at the National Institute of Securities Markets will be developed, regulated, maintained, and enforced by Securities and Exchange Board of India (SEBI), and it will be able to recognise the awarding of degrees, diplomas, and certificates in order to strengthen the capacity of functionaries and professionals in the securities market.
Improving governance and investor protection in banking sector
Further, certain changes to the Banking Regulation Act, the Banking Companies Act, and the Reserve Bank of India Act are suggested in order to improve bank governance and strengthen investor protection.
Fintech services
Our digital public infrastructure, which includes Aadhaar, PM Jan Dhan Yojana, Video KYC, India Stack, and UPI, has made fintech services in India more accessible. The range of documents that are accessible to persons in DigiLocker will be increased in order to facilitate more innovative fintech services.
Any increase in LTCG rates generally is not taken positively because it leaves investors with less wealth. The current LTCG tax rate in India is 10% without indexation and is applied on gains exceeding Rs. 1 lakh on listed equity shares held for more than a year.
Assets that create profit and are kept for a short period of time – less than a year in case of equity – are referred to as short-term capital gains (STCG). The STCG on equity is taxed at 15%.
According to the Budget document, the income from market-linked debentures is proposed to be taxed as short-term capital gains at the applicable rates.
