Increasing tax on Short-term capital gains 6

Finance minister, P. Chidambram, has proposed increase in tax on short-term capital gains from 10% to 15% on sale of shares or units of equity oriented funds. It is bad from small investors point of view. As number of such investors has increased many fold, it was expected that finance minister will propose a reduction in tax.

As per experts, as a short term effect, this hike in tax rate could stem capital inflows and negatively impact the strength of Indian rupee against other major currencies. It could lead to selling by select FIIs to take money out of the table before the new rate comes in to effect. In long run, this hike will dampen the enthusiasm of small investors in share trading.

What is in the mind of finance minister?