The Association of National Exchanges Members of India (ANMI), a body of stockbrokers, has called for the reintroduction of the rebate in Securities Transaction Tax (STT) and Commodities Transaction Tax (CTT) to increase volume and participation in the market. The recommendations were made in the run-up to Union Budget 2023-24.
Seeking the reintroduction of Section 88E for the rebate, the brokers’ lobby said India is the only geography applying STT and CTT charges in the derivatives and commodities segments.
In a proposal submitted to Nitin Gupta, chairperson of Central Board of Direct Taxes (CBDT) for the budget, ANMI has also sought a tax exemption of up to Rs 1 lakh in short-term capital gains (STCG).
At present, STCG from equity shares are charged tax at the rate of 15 per cent and do not enjoy the tax exemption available to long-term capital gains. Moreover, STT is already payable on these transactions.
“Since this STCG has also arisen after paying STT, it is desirable that STCG be also allowed a tax exemption up to Rs 1 lakh. That will accelerate participation in the market and encourage investment,” said ANMI.
In its submission, the association has sought a reduction in the number of classifications of incomes from capital market transactions, in order to do away with speculative income. Currently, intraday cash market trading is classified as speculative income but intraday derivative trade is classified as business income and is subject to a different tax treatment. ANMI has recommended limiting the classifications to business income, long term capital gains and short term capital gains.
The broker body has also sought relaxations in set-off provisions for carry forward business loss.
“The current year’s business loss can be set off against any head, except salary, but business losses carried forward can be only adjusted against business income. Taxpayers aren’t able to benefit from this provision in cases where there is a carry forward of business loss but no business income in subsequent years,” noted ANMI.
The association has also proposed to increase the threshold exemption limit for TDS on dividends from the current Rs 5,000 to Rs 10,000. Currently, 10 per cent TDS is applicable for dividend income above Rs 5000 for an individual.
Furthermore, the stockbrokers have requested to grant industry status to market intermediaries registered with the Securities and Exchange Board of India (Sebi). They are of the opinion that the move will remove unwarranted restrictions and help reduce the cost of funding and raising capital.
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