Budget 2016: STT change might not have much impact on traders

By: | Updated: February 29, 2016 2:30 PM

The Finance Minister Arun Jaitley proposed to hike rate of Securities Transaction Tax (STT) in case of ‘Options’ to 0.05 per cent from 0.017 per cent earlier.

budget 2016, union budget 2016, 2016 budget news, budget news, union budget news, budget 2016 news, budget income tax, union budget 2016, income tax, budget expectations, arun jaitley, budget news india, budget india newsThe Finance Minister Arun Jaitley proposed to hike rate of Securities Transaction Tax (STT) in case of ‘Options’ to 0.05 per cent from 0.017 per cent earlier.

The Finance Minister Arun Jaitley proposed to hike rate of Securities Transaction Tax (STT) in case of ‘Options’ to 0.05 per cent from 0.017 per cent earlier.

On the proposed rate hike, Nithin Kamath, founder and chief executive officer, Zerodha, said, “The increase in STT from 0.017 per cent to 0.05 per cent seems to have caused a ripple in the market, but traders should understand that this does not make any material difference for active traders as STT is calculated on the sell value of the premium.”

For example if you were to buy 4 lots Nifty Options at Rs 100, and sold the same back at Rs 100, then the break even on this trade would now be 100.05 instead of 100.017.

In another proposal, tax at the rate of 10 per cent of gross amount of dividend will be payable by the recipients, that is, individuals, HUFs and firms receiving dividend in excess of Rs 10 lakh per annum.

“Taxing dividend income above Rs 10 lakh at 10 per cent is something that serious long term inventors will worry about,” said Kamath.

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