DIRECT TAXES
| Securities transaction tax abolition, rate revision on the table Fri, 18 Jun 2010 19:21:50 GMT |
| The Economics Times Securities transaction tax abolition, rate revision on the table NEW DELHI: The securities transaction tax (STT), whose abolition has been a long-pending demand from investors, will be reviewed when the government overhauls the capital gains tax regime, a senior finance ministry official said. The government could look at two options: scrap STT altogether or revise the existing rate. “We will take a call on STT after calibrating the capital gains tax, based on what is convenient to revenue. We are yet to decide whether to continue STT or if it should be merged with the capital gains tax,” Central Board of Direct Taxes (CBDT) chairman S S N Moorthy said on Friday. At present, investors who pay STT are exempt from capital gains when they sell their shares one year after holding them. The original code had proposed scrapping STT and levying capital gains tax, The revised discussion paper on the code has, however, proposed retaining STT and adjusting it with the new regime on capital gains. The new regime will soften the tax blow for investors who sell shares after one year of holding them. The plan is to allow a deduction on the capital gains and add this to the taxpayers’ total income. The taxpayer would then pay income tax depending on the slab. Such a concession will not be available for shares sold within one year. “STT is proposed to be calibrated based on the revised taxation regime for capital gains and flow of fund to the capital market,” the discussion paper said. The fate of STT will hinge on the amount of deduction to be allowed on long-term capital gains. STT, introduced in 2004-05, is levied on transactions in securities markets. It is charged on purchase or sale of securities such as equity shares, derivatives, bonds and units in mutual fund schemes. The government had then linked STT to the capital gains tax regime. Many proposals in the original code have been diluted to lower the tax burden for companies and individuals. Earlier in the day, finance minister Pranab Mukherjee said the government will take a final view on tax slabs after receiving all inputs. “The tax structure would be revealed in the legislation that is introduced in the Parliament.” |
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