The Association of National Exchanges Members of India (ANMI) will seek set off of Securities Transaction tax (STT) against long term capital gains tax (LTCG) from the Finance Ministry.
According to ANMI, the implementation of both STT and LTCG may lead to job losses with no major benefit to government revenues.
Anil Shah, a member of Ahmedabad-based ANMI, told Moneycontrol, “We are trying to convince the government to provide set-off against long term capital gain tax in Securities transaction tax. When market cap was Rs 51 lac crore in 2007-08 STT collection was Rs 8,576 crore, and in 2016-17 when market cap was Rs 121 lac crore, the STT collection was just Rs 8,358 crore. It shows STT income is not increasing as it should increase since market cap increased by almost 3 times.”
Another broker, on condition of anonymity, said,“Government should give set off against LTCG. There is less demand in respect of STT collection since most of players like foreign institutional investor or mutual funds are not liable to take set off against LTCG. Market is already becoming costly and we are various different transaction money to the government and regulator. The RBI governor has also shown reservations against LTCG.”
On Wednesday, while announcing the monetary policy decision Reserve Bank Governor Urjit Patel said, “Corporate tax on companies dividend distribution tax, tax for dividend income above Rs 10 lakh, STT and capital gain tax already exist in the economy. There are five taxes on capital, and that would obviously also have an impact on investment and saving decisions.”
Shah also listed the numerous taxes currently imposed on equity transactions. “The stamp duty on delivery per Rs 1 crore is Rs 1,000, on intraday and derivative it is Rs 200 per Rs 1 crore. STT per Rs 1 crore in cash markets is Rs 1,750 on intraday, while on derivative stock futures it is Rs 500 per Rs 1 crore. Stock exchange transaction charges in cash market is Rs 300 plus GST, while on stock future exchange transaction it is Rs 200, on SEBI turnover Rs 15 per Rs 1 crore volume, and brokerage also. It may lead to job loss also in the market.”
However, the government has so far been clear it has no plan to review the LTCG and STT matter.moneycontrol