Sunday, March 1, 2015

No respite on transaction costs nor on taxes (STT or CTT)

No respite on transaction costs nor on taxes (STT or CTT)
While the Corporate India may have many reasons to celebrate – from lower rate of taxation to direct and indirect measures to support Make in India, stock brokers have got a raw deal in this Union Budget presented by finance Minister Arun Jaitley. 

Brokers were expecting some respite on security transaction tax, commodity transaction tax to cut down on the transaction tax. The logic was lower STT or CTT will lead to lower transaction costs and more investors and traders will participate in the stock and commodities market. This demand did not fructify. 

Brokers also did not get any favourable response on their prayer of reducing short term capital gain, which is charged at 15.45% on gains on equity investments held for less than one year. 

Brokers have to pay service tax on the brokerage charged to the client. This further inflates the transaction costs for the end traders and investors. Brokers demanded a cut in rate of service tax from extant 12.36%. In line with overall increase in service tax to 14%, brokers have to collect more from their clients, resulting into higher transaction costs.

Brokers were demanding lower transaction taxes and lower capital gains tax.

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