Brokers send Budget wishlist to Sebi

'Extensive thought has been put in, and we have pondered over each and every suggestions and demands received from our members.'
Samie Modak reports.

Stock brokers have sent a seven-point Budget wish list to markets regulator Securities and Exchange Board of India (Sebi).

Rationalisation of securities transaction tax (STT), exemption from long-term capital gains (LTCG) tax, and withdrawal of dividend distribution tax (DTT) are some of their key demands.

The Association of National Exchanges Members of India (Anmi) and the BSE Brokers Forum have submitted the Budget memorandum to Sebi Chairman Ajay Tyagi, requesting these to be included in the Budget recommendations the markets regulator sends the finance ministry.

'We would like to state that extensive thought process has been put in, and we, as associations, have pondered over each and every suggestions and demands received from our members,' Anmi and the BSE Brokers Forum wrote to Sebi.

Brokers are of the opinion that additional STT charged on exercise of options needs a re-think as it is leading to 'inefficient pricing' at the time of settlement.

An additional STT at the rate of 0.125 per cent is levied when option contracts are exercised.

Further, the brokers's bodies have said there has been an increase in the rate of STT, withdrawal of tax rebate and introduction of GST, without subsuming of statutory levies applicable to stock exchange transactions.

If this is done, volumes will get a boost and, in turn, will lead to an increase in government revenue.

Another key demand is exemption of LTCG tax on securities held for over three years.

Interestingly, 10 per cent LTCG has been introduced this financial year.

Earlier, gains made on sale of shares held for a period of one year or more were exempted from taxes.

'It is pertinent to mention that in India, the percentage of total population investing in stock exchange-traded instruments is abysmally low. Hence, there is need to attract and incentivise the investors for holding the investment for long term so as to attract conventional investors who invest in gold, fixed-return instruments or real estate,' the letter stated.

The brokers' association observed imposition of DTT was adversarial and needed to be withdrawn.

'The present form of adversarial taxation on dividend of around 20 per cent results into triple taxation of corporate earnings. The tax on the dividend should be in the form of equalisation to balance difference between corporate and personal tax,' the letter stated.

'Hence, it is recommended that DTT be withdrawn and the tax should be levied at 10 per cent on the recipient,' the letter stated.

Besides, the brokers have demanded an increase in limit of investments under Section 54EC of the Income-Tax Act, exemption of interest from levy of GST and abolition of stamp duty on stock exchange transactions.