FE@CAMPUS MASTERMIND: Response by Ashish V Kulkarni to question for Feb 4-10
Securities transaction tax was introduced in 2004 by the then (and current ) finance minister hon. P Chidambaram ji by abolishing tax on long term capital gains and reducing short term capital gain tax . STT means tax levied on purchase and sale of securities through stock exchange.
1.Removed or reduced costs on security transactions will help to broaden the market participation.
2.Considering the macro-economic outlook, weak investment activity and to ensure adequate liquidity in the system, STT on equity transactions needs to be significantly reduced and withdrawn for derivative transaction.
3.Withdrawal of STT on derivative is justified - as unlike investors who take delivery; those who trade derivatives churn their trades many times during the day.
4.Collecting tax only one time that is either( purchase or sale of securities)
5.Reducing fiscal deficit government implement commodities transaction tax on specifically on gold. And remove tax on STT
6.Reduction or phase-out of the tax might not affect the governmentís revenue collections significantly because it already levies short-term and long-term capital gains tax on almost all transactions.
7.At present, the STT rate is 0.125 per cent of the total volume of the transaction. So by removing tax govt. not faces any problem.
So to enhance market activity govt. removes S.I.T. from union budget 2013-14.
Ashish V Kulkarni
MBA 1ST YEAR
(This entry is part of our FE MASTERMIND contest. The views expressed in this article are personal and not that of the newspaper.)
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