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Stockbrokers seek rationalisation of tax structure for capital market
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SME Times News Bureau | 16 Jan, 2021
As the Union Budget for FY21-22 nears, stockbrokers have sought
rationalisation and streamlining of the structure for the capital
market.
The industry body stockbrokers Association of National
Exchanges Member of India (ANMI) has written to Central Bank Direct
Taxation (CBDT) on doing away with the multiple classification system
for calculating tax on capital market income.
In a statement,
ANMI noted that financial markets worldwide play an important role in
garnering growth capital for the economy. In the years following the
coronavirus pandemic, catalysing equity market participation will hold
the key to reviving India's GDP growth, it added.
ANMI has urged
the government to incentivise and encourage equity market investments by
streamlining the tax structure applicable for market transactions in
the Union Budget for the financial year 2021-22.
It has pointed
out that in India, currently, there are multiple classifications for
capital market income, such as speculative income, business income among
others. While the intraday cash market trading is classified as
speculative income, the intraday derivatives trade, on the other hand,
is classified as business income.
"In fact, except India, no
other country has this concept of speculative income. Globally trading
positions are treated as ordinary business income and investment
positions are treated as capital gains," it said.
This large
variety of classification of income arising out of capital market
transactions is creating fungibility problems with respect to profit or
loss incurred in different types of trades, ANMI said.
The
industry body also said that to boost equity market participation, the
concept of speculative income should be done away with in the Union
Budget 2021-22.
Also, like global markets, there should be
limited categories of classification of incomes -- Business Income,
Long-term Capital Gain and Short-term Capital Gain, for the ease of the
taxpayer.
It has also said that due to the revenue implications,
while abolition of Securities Transaction Tax (STT) and Commodities
Transaction Tax (CTT) on all non-delivery trades may not be a feasible
option at this point of time, the tax rebate under section 88E should
be reintroduced to provide a level playing field to Indian market
participants compared to global markets.
"Reintroduction of
Section 88E will result in increased volumes and therefore much larger
collection of STT/CTT. In fact, revenues could also double due to
increased participation in markets, which will be a boon for
stimulating the GDP growth in the post-COVID recovery phase," ANMI said.
Invest19,
a stock tech platform simplifying investment experience, has suggested
that in order to augment the financial requirements of unlisted
companies, the government should ease out IPO listing criteria and to
mitigate the financial losses of the general public, the administration
should rollback the LTCG tax.
A senior official with Invest19,
Elena, said that the government should focus on enrolling more people
under insurance cover so that a major chunk of the total population can
support themselves from loss of savings. The government should avoid
restricting fiscal deficit in order to boost their spending and inject
more liquidity into the economy, the official added.
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Customs Exchange Rates |
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