‘Govt My Sleeping Partner’, Says Mumbai Broker to Nirmala Sitharaman; FM Has A Witty Response

Are investors and brokers bearing an excessive tax burden in India? During a recent event in Mumbai attended by Union Finance Minister Nirmala Sitharaman, a broker raised concerns about the fairness of the tax system for investors and brokers in India.

He pointed out that investors are taking on financial risks, yet it is the government that primarily benefits from the returns. Referring to the government of India as a “sleeping partner,” the broker’s remark elicited a smile from the finance minister.

Also Read: FM Nirmala Sitharaman Warns On ‘Unchecked Explosion’ In Retail F&O Trading

“When we are putting a trade for a retail investor, you are attracting a number of taxes- GST, IGST, stamp duty, STT, and long-term capital gains tax… so today the government of India is earning more than the broker,” the broker said at the “Vision for Indian Finance Markets” event at BSE in Mumbai.

He said investors and brokers are risking everything, including money and staff costs. “I am taking a whole lot of risk, and the government of India is taking away all of the profit… you are my sleeping partner, and I am the working partner.”

Sitharaman responded to the broker’s characterisation, saying, “A sleeping partner cannot answer sitting here,” drawing laughter from the audience.

The broker also highlighted the challenges of buying a home in Mumbai and how taxes make it worse. “Today, we can’t make payments in cash… so if I am buying a house, I will have to pay by cheque. My bank balance is purely after paying all the taxes to the government of India. But when I am buying a house, I have to pay 11 percent GST in Mumbai. So how will you assist a small person with limited resources and brokers who have to pay a hoard of taxes to the government?” the broker asked the minister.

Addressing broader concerns, Sitharaman also appealed to decision-makers at stock exchanges NSE and BSE during the event to work closely with the regulator, the Securities and Exchange Board of India, to create stringent regulatory standards.

Any unchecked explosion in retail trading of futures and options, she warned, could create future challenges not just for markets, but for investor sentiment and household finances.