Stock brokers want government to hand out tax cuts and refunds
It’s that time of year when various industry associations and trade bodies write to the government listing their wish list for the Union budget. Typically, the wishlist includes incentives and discounts and this year is no different.
The Association of National Exchanges Members of India (ANMI), the umbrella body for nearly 900 stockbrokers in the country, has written to the government asking for, among other things, a reduction in the classification of income from stock market investments for calculation of tax, reintroduction of refunds of Securities Transaction Tax (STT) and Commodity Transaction Tax (CTT) and certain other tax exemptions.
In a memorandum submitted to the government, ANMI has demanded industrial status for all intermediaries registered with the Securities and Exchange Board of India (SEBI), as it believes that such a move will remove undue restrictions while reducing the cost of funds.
In another important request, ANMI pointed to the fact that income from stock trading has been categorized into too many categories, which poses practical problems for investors.
For example, intraday transactions in the cash market are classified as speculative income, but intraday transactions in derivatives are classified as business income. Market participants suggested that the government create three broad categories: business income, long-term capital gain and short-term capital gain. They believe this will help investors and also be a step towards the government’s ‘ease of doing business’ initiative.
On the issue of taxation, the brokerage body also requested the reintroduction of the rebate which was available under the old Section 88E instead of STT & CTT. While reiterating that it believes there is a “strong case for the complete abolition” of STT and CTT, the industry body said that at least reimbursement, which was phased out in 2008 , can be restored.
“…the revenue impact of the re-introduction of Section 88E will result in increased volumes and therefore much greater collection of STT/CTT and in fact revenue could double due to increased participation markets,” said ANMI’s submission to the government.
Continuing its demands for tax incentives, ANMI also suggested that the government consider providing tax exemption of up to Rs 1 lakh on short-term capital gains under Section 111A and raising the threshold. exemption of Rs 5,000 to Rs 10,000 from the payment of TDS on dividend on all resident investors.
He also called for tax exemptions for the elderly for dividend income up to Rs 50,000. interest earned on the fixed deposit and the same exemption limit should be provided in case of receiving dividend income, as this will encourage the elderly person to invest in the capital market,” the ANMI letter states.
Among other things, he called on the government to rationalize GST rates, extend the time limit for claiming the withholding tax credit for the purposes of Section 199 of the Income Tax Act, and also to allow business loss to be carried forward and adjusted for any head of income except salary – currently business loss can only be adjusted for business income.