Finally the CGT
was brought to the parliament by non other than the Prime Minister of
Sri Lanka. This is not gazetted yet, so officially it is still not law,
but may be law after the 22nd of March 2016.
This is not good for the investor sentiment as we know. As such billions of rupees are getting wiped out from the market.
But
one thing that's clear is that the tax department will not get a single
cent as CGT when the prices are down. They will benefit only when the
prices are high. But just because the prices are high doesn't mean that
you should sell. Tax department is going to charge you only if you sell
and realize a profit, if not they can't come begging for you to pay CGT.
Also if you sell and buy another stock with that money you do not need
to pay the CGT. You can argue about this with me, but that is a fact. If
you realize a profit and show only you will have to pay.
Therefore
if you are an investor who are already having a tax file, then the
opportunities you will have to make money out of this is high. But if
you are a person who doesn't have a tax file, and do not intend for some
reason not to show your income to the tax department then you got to be
careful.
Another
reality is this, the CGT earlier was in existence till '87 or '92, so
the tax consultants who were experienced at that time were over 40 years
old. But they may be now over 69 years old. How many of those officers
are still in the business we do not know. Therefore infrastructure, and
the mechanism for the implementation of this is to be seen. Also many of
the investors in their 30's and 40's do not have any knowledge, or the
knowledge is limited. They will have to increase their knowledge. Also
the experience is important, having the knowledge is not experience, so
if you have the knowledge with no experience too is not the right
approach.
As
I came into stocks in the early 90's, I have a little bit of memory of
this, and some experience thanks to my superiors, but that is all.
Imagine the advisers who are younger. Therefore this is a big new
experience to all of us.
I
do not know the knowledge and the experience the Politicians are having
too. If they have a higher knowledge of this than us, I hope they will
have a mechanism of sharing that knowledge with the others.
Finally
Mr. Mahinda Rajapaksha, and the people who voted for him to win the War
had a Great Military with knowledge and experience to finish the War. I
hope Mr. Mithripala Sirisena and the people who voted for him to come
to power will have Great Economists with knowledge and experience to
develop a great Economy.
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