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Stock brokers want government to dole out tax sops and rebates 

Stock brokers want government to dole out tax sops and rebates 

Association of National Exchanges Members of India (ANMI) has sought reintroduction of rebate in lieu of STT & CTT along with other tax benefits to boost investments in capital markets.

ANMI has highlighted the fact that incomes arising from stock market transactions have been classified into too many categories causing practical issues for the investors.  ANMI has highlighted the fact that incomes arising from stock market transactions have been classified into too many categories causing practical issues for the investors. 

This is that time of the year when various industry associations and trade bodies write to the government listing their wish list for the Union Budget. Typically, the wish list includes incentives and rebates and this year is no different. 

The Association of National Exchanges Members of India (ANMI), the umbrella body of nearly 900 stock brokers of the country, has written to the government requesting, among other things, reduction in classification of income arising from stock market investments for tax computation, reintroduction of rebate against securities transaction tax (STT) & commodities transaction tax (CTT) and certain other tax exemptions. 

In a memorandum submitted to the government, ANMI has demanded an industry status for all intermediaries that are registered with the Securities and Exchange Board of India (SEBI) as it feels that such a move will remove unwarranted restrictions while lowering the cost of funds. 

In another important demand, ANMI has highlighted the fact that incomes arising from stock market transactions have been classified into too many categories causing practical issues for the investors. 

For instance, intraday cash market trading is classified as speculative income but intraday derivative trade is classified as business income. Market participants have suggested to the government creating three broad categories – Business Income, Long Term Capital Gain and Short Term Capital Gain. They believe this will help investors and will also be a step towards ‘ease of doing business’ initiative of the government. 

On the issue of taxation, the broker body has also sought the reintroduction of rebate that was available under the erstwhile Section 88E in lieu of STT & CTT. While reiterating that it believes that there is a “strong case for complete abolition” of STT & CTT, the industry body has said that at least the rebate, which was done away in 2008, can be brought back. 

“… the revenue implication on reintroduction of Section 88E will result in increased volumes and therefore much larger collection of STT/CTT and in fact, revenue could double due to increased participation in markets,” stated the ANMI submission to the government. 

Continuing with its tax incentive demands, ANMI has also suggested that the government could look at providing tax exemption up to Rs 1 lakh in Short Term Capital Gains under Section 111A and raising the threshold exemption limit from Rs 5,000 to Rs 10,000 from payment of TDS on dividend on all resident investors. 

It has also requested for tax exemptions for senior citizens for dividend income up to Rs 50,000. “Senior citizens are provided exemption up to a threshold limit of Rs.50,000/- u/s.80TTB from interest earned on fixed deposit and the same exemption limit should be provided in case of receipt of dividend income as it will encourage the senior citizen to invest in capital market,” stated the ANMI letter. 

Among other things, it has requested the government to rationalise GST rates, higher time frame for claiming credit for tax deducted at source for the purpose of Section 199 of the Income Tax Act, and also allowing to carry forward business loss and adjusting it against any head of income except salary – currently, business loss is allowed to be adjusted only against business income.