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India's Sensex Declines After Budget Proposes Tax on Stock Gains

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India’s benchmark equity index dropped for a third day as the government proposed to revive a tax on equity investments 14 years after it was scrapped to offset revenue losses.

The S&P BSE Sensex fell 0.2 percent to 35,906.66 in Mumbai, after its best January gain since 2015. Twelve of 19 sectoral sub-indexes compiled by BSE Ltd. declined led by a gauge of consumer goods companies. Oil & Natural Gas Corp Ltd. and Sun Pharmaceutical Industries Ltd. were the worst performers on the benchmark index.

“It’s time to be conservative as most of the market participants are invested nearly to the fullest,” said Ajay Srivastava, managing director at Dimensions Consulting Pvt. “I advise investors to keep rotating their portfolio at the right times as there will hardly be any new opportunities to make money.”

Profit exceeding 100,000 rupees ($1,565) from shares held for more than a year will be taxed at 10 percent, Finance Minister Arun Jaitley told lawmakers in New Delhi Thursday. At present, gains from equity investments held for more than 12 months are exempt from tax.

“The return on investment in equity is already attractive even without tax exemptions,” the finance minister said. “There is therefore a strong case for bringing the long term capital gains from listed equities into the tax net.”

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