Korea ditched capital gains tax, markets flying: Ex-CEO on what is stifling Indian market
The golden goose is being butchered in the quest to extract the maximum from the 5-6 crore investors/traders/affluent, says the former CEO
- Sep 16, 2025,
- Updated Sep 16, 2025 2:07 PM IST
Former CEO and investor Ajay Bagga on Tuesday said the Indian markets have stayed below their all-time highs for almost 13 months, while South Korea's decision to shelve a proposed capital gains tax has fueled a record rally in its stock market.
"We will soon complete 13 months of the Nifty being below its all-time high hit in end Sep 2024. The high capital gains taxes on all asset classes and a very poorly thought-out tax on share buy backs is constraining Indian markets. The golden goose is being butchered in the quest to extract the maximum from the 5-6 crore investors/traders/affluent," Bagga wrote on X.
He pointed to Korea as an example of policy reversal boosting sentiment. "Korea offers a good model...proposed high capital gains taxes were shelved in the light of the global policy chaos. Korean markets are hitting daily record highs. Not a one on one correlation, there is a lot else going right for South Korea for now. But this has been a huge sentiment booster," he added.
South Korea had planned to lower the capital gains tax threshold for stock investors from 5 billion won ($3.6 million) to 1 billion won ($717,535). The proposal triggered a selloff in August that erased billions in market value. President Lee Jae Myung's government abandoned the move after facing backlash from retail investors, a bloc that helped power the country's market surge. The reversal marked Lee's first major policy shift since taking office in June.
Bagga said India, in contrast, has burdened investors with multiple levies. "The Indian govt will collect over Rs 60,000 crores as STT. STT was introduced while the then FM said on the floor of the Parliament that zero capital gains tax is being enshrined with this STT being levied. Overtime STT has been increased and huge short term and long term capital gains taxes, as well as tax on dividends, as well as taxes on tendering shares for share buy backs, have been brought in. This is in addition to SEBI charges, stamp duty, IGST, exchange charges and brokerage," he said.
He called investors "the proverbial Golden Goose." Bagga added, "Even if they dont make money, they have to pay all these fixed charges from STT to a long list of charges. Over the last 12 months, most Mutual Funds and the Indian stock indices have yielded negative returns. However, investors are in the dock for all these fixed charges. And the few who made money have to pay huge capital gains taxes."
The investor invoked the Laffer Curve to argue for lower taxation. "Laffers Curve works. Lower taxes lead to higher government revenues, higher compliance and less suppression. We see thousands of UHNI investors relocating their base to tax-advantaged locations to avoid these high taxes. The revenue loss increases with every hike in taxes and hike in other levies. Need some action to unleash positive sentiments in the Indian investment landscape," he said.
Former CEO and investor Ajay Bagga on Tuesday said the Indian markets have stayed below their all-time highs for almost 13 months, while South Korea's decision to shelve a proposed capital gains tax has fueled a record rally in its stock market.
"We will soon complete 13 months of the Nifty being below its all-time high hit in end Sep 2024. The high capital gains taxes on all asset classes and a very poorly thought-out tax on share buy backs is constraining Indian markets. The golden goose is being butchered in the quest to extract the maximum from the 5-6 crore investors/traders/affluent," Bagga wrote on X.
He pointed to Korea as an example of policy reversal boosting sentiment. "Korea offers a good model...proposed high capital gains taxes were shelved in the light of the global policy chaos. Korean markets are hitting daily record highs. Not a one on one correlation, there is a lot else going right for South Korea for now. But this has been a huge sentiment booster," he added.
South Korea had planned to lower the capital gains tax threshold for stock investors from 5 billion won ($3.6 million) to 1 billion won ($717,535). The proposal triggered a selloff in August that erased billions in market value. President Lee Jae Myung's government abandoned the move after facing backlash from retail investors, a bloc that helped power the country's market surge. The reversal marked Lee's first major policy shift since taking office in June.
Bagga said India, in contrast, has burdened investors with multiple levies. "The Indian govt will collect over Rs 60,000 crores as STT. STT was introduced while the then FM said on the floor of the Parliament that zero capital gains tax is being enshrined with this STT being levied. Overtime STT has been increased and huge short term and long term capital gains taxes, as well as tax on dividends, as well as taxes on tendering shares for share buy backs, have been brought in. This is in addition to SEBI charges, stamp duty, IGST, exchange charges and brokerage," he said.
He called investors "the proverbial Golden Goose." Bagga added, "Even if they dont make money, they have to pay all these fixed charges from STT to a long list of charges. Over the last 12 months, most Mutual Funds and the Indian stock indices have yielded negative returns. However, investors are in the dock for all these fixed charges. And the few who made money have to pay huge capital gains taxes."
The investor invoked the Laffer Curve to argue for lower taxation. "Laffers Curve works. Lower taxes lead to higher government revenues, higher compliance and less suppression. We see thousands of UHNI investors relocating their base to tax-advantaged locations to avoid these high taxes. The revenue loss increases with every hike in taxes and hike in other levies. Need some action to unleash positive sentiments in the Indian investment landscape," he said.