With the Union Budget less than a month away,the market community has started knocking on the finance ministrys doors for tax reliefs. Trading in stock markets will grow manifold if demands relating to the securities transaction tax,Income Tax Act and Companies Act are met in the forthcoming budget,they say. Representatives of the Association of National Stock Exchange Members of India (ANMI),who met finance minister Pranab Mukherjee last Friday,said their proposals would make trading in markets cost effective. One of our demands is repealing Section 73 in the Income Tax Act and Section 297 in Companies Act. Both these Acts have lost their relevance now, said ANMI (alternate) president Anil Bagri. While Section 297 needs a director of a company to get governments permission for any trade with his own company,Section 73 treats any trade in the markets by a company as speculation. Another demand is to bring in a change in the securities transaction tax (STT) regime. The present rates make us uncompetitive in comparison to the global markets, Bagri said. As per the current STT rate structure,a delivery-based cash market transaction is taxed at 0.125 per cent. Rationalisation of stamp duty charges and STT will bring down the trading cost significantly and increase volumes. Stamp duty for share market transactions is levied in a different manner in different parts of the country,brokers are sometimes subjected to double taxation as there is no uniformity, said ANMI secretary Ishaq Merchant. As per the 2008 Budget proposal,the STT paid is now treated as any another deductible expenditure against business income. Last year,the government had hiked the short-term capital gains tax on sale of shares to 15 per cent from 10 per cent,which amounted to a massive 50 per cent hike in the tax rate. Another of the associations demands is that of getting industry status for the broking industry. In terms of people,capital and the technology involved,the broking industry is very big. If industry status is granted,then fund raising for brokers will be easier, Bagri said.
