A Radical Wishlist for the Finance Minister

Dear readers, we are about to share with you a fairly drastic wishlist we have compiled for our esteemed finance minister. Please do not be alarmed by the seemingly intensive nature of these suggestions. Consider them as a shock treatment, a classic method to encourage change.

A More Nuanced Approach to Capital Gains Tax

Our first suggestion is to further refine the capital gains tax structures. Currently, we have two categories: long-term and short-term. We suggest the introduction of two additional brackets: Ultra short-term and ultra long-term. This move is designed to be dynamic rather than static.

The idea behind Ultra short-term tax is to have it at twice the rate of short term gains. If currently, the short-term gains are taxed at 30%, ultra short-term gains should be taxed at 60%. But on the other side of the spectrum, for Ultra long-term gains (profits made from holdings longer than 10 years), these should be exempted from any tax. This move is designed to dissuade short-term trading and to foster a culture of super long-term investments.

Adjustments to Futures and Options (F&O) Trading

The second item on the wishlist pertains to futures and options (F&O) trading. We propose that retail investors should not just be allowed to trade futures and options but should be encouraged to do so. However, the caveat should be that retail investors should be required to have a 100% margin requirement. Hence, the F&O market will effectively function like a cash market. This might save the most inexperienced investors from significant losses.

Compulsory Asset Allocation

Our third proposal is for a requirement for all investors to formulate a comprehensive asset allocation plan. This plan should then be submitted alongside their tax returns. This move would ensure seriousness towards asset allocation.

Technology companies can use their AI tools to review these submissions and grade them accordingly. A tax rebate could be awarded to the best asset allocators, while those who fall short could be issued warnings.

Penalisation for Excessive Mutual Fund Schemes

Investors should face penalties for owning a substantial number of mutual fund schemes. The finance minister and her income tax team can start by sending notices to investors who own more than a suitable number of funds. Ideally, investors should have five funds- two for equity, two for debt, and one for liquid funds. If need be, this could be increased to six funds but no more. AI tools can once again be employed to review responses. Failure to provide satisfactory answers or to take corrective action could be regarded as a significant breach by the IT department.

Regulate the Finfluencers

The final entry on our wishlist has to do with the financial advice provided by influencers, which we label finfluencers. The finance minister could impose a notional capital gain tax on all claims made by unregistered finfluencers. This could be a decisive step towards the better regulation of financial advice in the digital world.

This was our radical wishlist, and we are ready to send it out to the finance minister. We welcome your suggestions at contramoneyindia@gmail.com

Please note: It’s always advised to consult your personal investment advisor or wealth manager before making any investment decisions. Our information is intended for informational purposes only, based on our analysis and study. Source: Reader Wall