Turnover tax from today

Share transactions will come under the purview of the Securities Transaction Tax (STT) from Friday. The new STT rates are 0.15 per cent on d...

Share transactions will come under the purview of the Securities Transaction Tax (STT) from Friday. The new STT rates are 0.15 per cent on delivery-based trades on the stock markets. The levy will be equally split between the buyer and seller.

Moreover, an STT rate of 0.015 per cent will be levied on sellers in non-delivery based equity transactions and 0.010 per cent on sellers of derivatives.

While brokers are expecting a dip in volumes in the first few days, by and large they expect a smooth transition to the post STT regime.

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STT will not be restricted to share deals alone. From October 1, all equity mutual fund sales will also attract a transaction tax of 15 paise for every Rs 100. The tax will be deducted by mutual funds at source.

Wherever STT is paid, long-term capital gains tax will be nil. On the other hand, short-term capital gains will be taxed at a lower rate of 10 per cent as against 30 per cent earlier. These changes were announced in the last Union budget.

“Day traders and speculators will be forced to pay the tax for the first time. But their tax rates will be lower. Besides, FIIs and other retail investors will be forced to shell out a higher amount as tax,” said BSE dealer Venkatesh Aiyer.

The finance minister had proposed a higher duty earlier but he was forced to reduce the rates following stiff opposition from the market community. Brokers had argued that the earlier proposed high STT rates would have brought down volumes and resulted in loss for revenue to the government.