Top

Brokers' body asks govt to reduce GST, scrap STT, dividend tax

Amni has flagged concerns about GST regime creating 'some difficulty' in the financial market.

New Delhi: The government should reduce GST on brokerages to 12 per cent as well as scrap taxes on securities transactions and dividends, according to a leading stock brokers' group.

As preparations for the Union Budget 2018-19 is underway, the Association of National Exchanges Members of India (Anmi) has flagged concerns about the Goods and Services Tax (GST) regime creating "some difficulty" in the financial market.

Post GST, the burden of taxation on the transaction charges has increased, the grouping said in a representation to the finance ministry.

"Rate of GST applicable on brokerage for share transaction is 18 per cent which is on much higher side and has further inflated the cost of transaction. We appeal to reduce the rate of GST to 12 per cent in the ensuing Budget," it added.

Besides, the brokers' group has requested the finance ministry to do away with the securities transaction tax and abolish dividend tax for growth of the capital markets.

According to the grouping, the STT plays a detrimental role in enhancing liquidity and creation of depth in Indian capital market.

"Removal of STT will encourage more liquidity and profitability in India, which in turn will increase depth in Indian capital market as well as more participation," the grouping said.

STT is the tax on transaction of equities as well as their derivatives and accounts for a bulk of the transaction cost after deducting the brokerage fee.

Further, Anmi has suggested for rationalising the STT calculation method for option trading by removing certain anomaly.

"Dividend distribution tax (DDT) should be done away with or the rates should be brought down to be nearly negligible" and amendment to Section 14A, Rule 8(d) of the Income Tax Rules are the two other demands for reforms by Anmi.

The applicability of Section 14A has impact on dividend income. DDT is levied at almost 20 percent on the company for distribution of dividend to its shareholders.

The tax burden for brokerages has been increasing over the last three years - it has risen to 18 per cent from 12 per cent, Anmi said.

Also, the brokers' body has said market intermediaries like sub-brokers should be exempted from registration under GST as they don't raise any invoice for clients directly but only through the brokerage.

It also asked that GST return should be submitted quarterly in order to promote 'ease of doing business' instead of monthly returns.

Stating that the stock broking community is the backbone of the capital market, Anmi reiterated its demand to give an industry status to the broking business.

( Source : PTI )
Next Story