Stock Brokers Urge Govt For Rebate In STT, Rs 1 lakh Exemption In STCG

Stock brokers’ body, Association of National Exchanges Members of India (ANMI), urged the government to re-introduce in the Budget 2023 the rebate in securities transaction tax (STT) and commodities transaction tax (CTT) to increase volume and participation in the market. It said India is the only country levying STT and CTT charges in the derivatives and commodities segments.

In a proposal submitted to CBDT Chairman Nitin Gupta, ANMI has also sought a tax exemption of up to Rs 1 lakh in short-term capital gains (STCG). “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.

STCG on equity shares is currently charged tax at 15 per cent without any tax exemptions like in the case of long-term capital gains (LTCG). STT is separately levied.

In its recommendations ahead of the Budget 2023-24, ANMI has suggested the reintroduction of rebate under Section 88E. It said the revenue implication on the reintroduction of Section 88E will result in increased volumes and therefore a much larger collection of securities transaction tax (STT) and commodities transaction tax (CTT).

What Are STT and CTT?

Securities transaction tax (STT), which is similar to tax collected at source (TCS), is a direct tax levied on the sale and purchase of securities that are listed on stock exchanges in India. STT is governed by Securities Transaction Tax Act (STT Act) and STT Act has specifically listed down various taxable securities transaction i.e., transaction on which STT is leviable.

When an investor buys or sells shares on the stock market, he/ she needs to pay STT. The tax rate is different for both intraday trading and delivery. In the intraday trade, 0.025 per cent STT is levying on the selling of shares. In delivery, 0.1 per cent STT is paid on both buy and sell.

CTT is also like an STT. Introduced in the Finance Act, 2013, CTT is levied on non-agricultural commodities such as gold, silver, aluminium and crude oil, among others.ss

What Is Capital Gains Tax?

Capital gains tax is a tax levied on profit from the sale of property or an investment. Currently, capital gains tax in India is imposed on investment gains based on a lock-in or holding period. Investments in equity or equity-linked mutual funds for more than one year are considered as long-term, and attract a 10 per cent tax on gains of more than Rs 1 lakh. Investments in equity held up to one year are considered short-term and attract a 15 per cent tax.

Now, as per reports, the government is planning to change its capital gains tax structure in the Budget 2023-24 to bring parity in various asset classes like equity, debt and immovable property, to tax them uniformly. It is different for different asset classes for now.

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