The Association of National Exchanges Members of India (Anmi), a lobby group for 900-odd brokers, has given six key recommendations to the Central Board of Direct Taxes for the upcoming Budget.
It has asked for an industry status for Sebi-registered market intermediaries. This will remove unwarranted restrictions, cost of funding and capital requirements for market intermediaries and will help create financial services companies of global scale.
According to Anmi, the I-T Act has several income classifications arising out of capital market transactions. This creates fungibility problems with respect to profits or losses incurred in different types of trades. For example, intra-day cash market trading is classified as speculative income, but intra-day derivatives trade is classified as business income.
The industry has suggested that the treatment of speculative income/loss under Section 45 of day trading in listed shares in which no delivery is taken or given be dispensed with and income arising from purchase and sale of shares without delivery be treated as business income.
Anmi believes that there is a strong case for complete abolition of the Securities Transaction Tax (STT) and Commodities Transaction Tax (CTT). It reaffirms that India is the only country that levies STT in the cash market and derivatives segment. Only South Korea levies STT on cash market equities. India is the only geography that levies STT and CTT in the derivatives and commodities segments.
Anmi has asked for reintroduction of rebate under erstwhile Section 88E for STT and CTT paid. The reintroduction of Section 88E will result in increased volumes and could lead to a much larger collection of STT/CTT.
Short-term capital gains arising on equity shares (listed) which have suffered STT are taxed at 15% plus surcharge without any exemptions like in the case of LTCG. Anmi wants short-term capital gain (STCG) be allowed a tax exemption up to Rs 1 lakh under Section 111A.
Anmi has suggested that carried forward business loss be allowed to be adjusted against any head of income, except salary, for up to eight years.
At present, TDS on dividend is not required to be deducted if dividend does not exceed Rs 5,000. However, this is limited to individual recipient shareholders only. Anmi wants it to be applied to all residents irrespective of status and the threshold for exemption limit be raised to Rs 10,000 from payment of TDS.
Anmi president Kamlesh Shah said, “For enhanced GDP growth, the government needs to incentivise and encourage equity investment. In this regard, we have submitted our recommendations which covered challenges that should be addressed in the upcoming Union Budget. Implementing these reforms would have a significant impact on the growth and development of our markets.”