Three-slab solution in the works

After the anguish, the good news. The finance ministry is understood to be working on a proposal to segregate the proposed securities transa...

After the anguish, the good news. The finance ministry is understood to be working on a proposal to segregate the proposed securities transaction tax into three slabs of 0.15 per cent, 0.015 per cent and 0.0015 per cent. The lower rates would be applicable to arbitrageurs and day traders respectively.

Alongside, the Securities and Exchange Board of India Sebi, on the other hand, is expected to soon announce waiver of interest on the vexed issue of registration fees based on turnover of stock brokers.

According to sources close to the development, finance minister Palaniappan Chidambaram asked capital market regulator Sebi to waive the 15 per cent penal interest levied on stockbrokers for delay in the payment of registration fees. Sebi is expected to waive about Rs 125-150 crore on this account.

The broking community is also believed to have come to an agreement with the ministry with respect to the proposed securities transaction tax. The rate of tax suggested by brokers8217; representatives is as follows: at the rate of 0.0015 per cent for day trading/speculative transaction, 0.015 per cent for the arbitrage-based transactions and 0.15 per cent for delivery-based transactions. This seems to have found favour with the ministry, sources said.

The proposed slabs of tax are being worked out based on the three-slab tax structure that existed in the form of long term capital gains, short term capital gains and the tax on business income. Speculators and day traders have to pay 30 per cent tax on the gains they make as it is treated as business income.

While delivering the Budget speech in the Lok Sabha on July 8, Mr Chidambaram had said, 8220;Sebi has been able to resolve the long-standing issue of brokers8217; fees and brokers may expect an announcement shortly8221;. The decision for the waiver of penal interest on the brokers8217; registration fees is seen against this backdrop.

Top broking sources who were present at the meeting with the FM on Tuesday at New Delhi along with GN Bajpai, chairman, Sebi, said 8220;In continuation of his budget speech, the FM asked the market regulator to implement the decision with respect to waiver of interest on the delayed payment of registration fee8221;. Sebi has been asked to work out the modalities for the same and will soon notify this details.

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Sebi has charged a one-time registration fee to the brokers on the basis of their turnover for the period of five years from the date of their registration with the regulator. Sebi charges a registration fee of 0.01 per cent on delivery-based turnover and 0.005 per cent on the buy side of jobbing transactions.