While BSE in its Budget recommendations has sought reduction in the Securities Transaction Tax (STT) to improve the investment culture, brokerages say any change in STT is unlikely.
As per the rules, 0.1% is charged on the delivery-based transactions (purchase and sale). For intraday transactions, 0.025% is levied only on the sale side. In the F&O segment, seller is supposed to pay 0.017% of the option premium, while the buyer has to pay 0.125% of the settlement price. For the futures, the seller is charged 0.01% of the sale value. In the last Budget, the STT on futures was reduced to 0.01% from 0.017%.
Experts say while the market participants would like to see a reduction, it is unlikely to happen. “While market participants would like to see the STT being abolished, we don’t see major changes,” said Rakesh Parikh, vice-president, equities, Motilal Oswal Securities. “The Budget could give clarity on the General Anti-Avoidance Rules (GAAR) and retrospective taxation, but any change in STT is unlikely,” Rajesh Cheruvu, CIO at RBS said.
As per estimates by brokerages and industry experts, the annual revenue collected from STT is around R6,000 crore. In the same vein, brokerages don’t see any major change in the capital gains tax structure. “Capital gains tax in India is reasonably low. As such, no major restructuring is required at this point of time,” said Nitin Jain, CEO, Capital Markets, Edelweiss.
The Shome committee report on the GAAR in 2012 said the revenues collected from the capital gains tax stands less than Rs 3,000 crore. Currently, the long-term capital gains are exempt from taxation, while the short-term capital gains are charged at the rate of 15%.