New Delhi, August 13: The removal of Securities Transaction Tax (STT) proposed in the new Direct Taxes Code may prove beneficial for market players as it may bring back strong volumes, analysts said.
“The abolishment of STT would be beneficial for brokers and day-traders, for whom the cost of transactions had increased considerably, and strong volumes may come back if it is removed,” Purpleline Investment Advisors CEO P K Agarwal said.
Finance Minister Pranab Mukherjee today released the Direct Taxes Code that would ultimately replace the over four-decades old Income Tax Act and bring all other direct taxes like wealth tax under its purview, if reasonable level of discussion happens on the code, a bill could be placed in the winter session of Parliament.
The radical tax reforms proposed include an abolition of the controversial STT and reintroduction of tax on long term capital gains on securities trading.
Echoing similar sentiments, SMC Global Vice-President Rajesh Jain said, “Removal of STT may bring back strong volumes in the market and may be beneficial for day traders and brokers but long term investors may suffer but that depends which tax is introduced eventually.”
Bonanza Portfolio Assistant VP Avinash Gupta said, “The proposal of removal of STT may be beneficial for the market and if the tax introduced in its place is at a lower rate it will be helpful.”
The code also wants 10 per cent rate on income above Rs 1.6 lakh to Rs 10 lakh against the current limit of up to Rs 3 lakh.
However, it proposes to reduce corporate tax rate by five per cent to 25 per cent from the current rate of 30 per cent.
Related Stories
Draft Taxes Code proposes major tax reliefCII said the code clearly indicates that an attempt has been made to make tax laws simpler, stable, robust and also streamline the various provisions in such a manner that there is less scope for litigation.
The code also proposed increasing the tax deduction on savings up to Rs 3 lakh.
The chamber, however said that phasing out of incentives must be gradual and backed by a lower tax burden on the tax payers.
The code also proposed new concepts such as treating charitable trusts as non-profit organisations and tax savings only at the time of withdrawal.
“These would need a deeper study. It is hoped that the new code would help provide stability, simplicity and flexibility in the tax laws and greater efficiency and accountability to the tax administration,” PHD Chamber President Satish Bagrodia added.
–Agencies