Investment Dealers Organization Calls on Government to Reduce GST for Capital Markets in Budget

The National Members Exchange Association of India (Anmi), on behalf of its 900 stockbrokers, has written to the GST Board on the rationalization of Goods and Services Tax (GST) rates for capital markets and urged the government to consider it in the upcoming Union budget for FY23.

“Anmi’s submission provides recommendations for increased GDP growth, equity investments that will need to be incentivized and encouraged,” he said in a statement.

Anmi said India’s capital market is burdened with many transaction costs, including various direct and indirect taxes, such as securities transaction tax (STT), GST and stamp duty. The capital market was one of the first sectors to be included in the scope of the service tax regime and has seen a continuous increase in service tax and GST rates from a nominal from 5% to 18%.

According to ANMI, a rationalization effort to reduce GST rates to 12% may boost the sentiments of various market participants simply by an insignificant reduction in tax collection.

“A deeper and stronger market can attract investments from REITs, FIIs and NRIs by presenting them with a competitive market in terms of transaction cost. Anmi recommends that the rate be streamlined to benefit the brokerage industry as a whole and that the revenue implication would mean increased volumes and participation by a big no. investors,” he said.

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Dolores W. Simon