The 20% cut in securities transaction tax ( STT) has been below market expectations as brokers were expecting at least 40% reduction in the tax.
The proposal is expected to only marginally push delivery-based volumes in the cash segment in which the new rate of STT of Rs 100 per Rs 1 lakh turnover will be applicable in 2012-13. Currently, delivery-based turnover accounts for less than 20% of the total cash turnover on the bourses, according to brokers.
In his budget, FM Pranab Mukherjee announced a relaxation in the STT rates from the existing 0.125% on delivery-based turnover in the cash segment, to 0.10%. This will help reduce transaction cost marginally, say brokers.
Most of the brokers are concerned that the STT reduction is not carried out across all the categories of turnover as it was generally expected after the overall business on the country's leading stock exchanges declined substantially amid weak market conditions last year.
However, the government refrained itself from making any significant changes in the rates, given that STT has proved to be the most simplest and convenient source of revenue for the government.
STT was introduced in India in 2004-05 in a bid to stem the tax avoidance of capital gains tax.
....more info
The proposal is expected to only marginally push delivery-based volumes in the cash segment in which the new rate of STT of Rs 100 per Rs 1 lakh turnover will be applicable in 2012-13. Currently, delivery-based turnover accounts for less than 20% of the total cash turnover on the bourses, according to brokers.
In his budget, FM Pranab Mukherjee announced a relaxation in the STT rates from the existing 0.125% on delivery-based turnover in the cash segment, to 0.10%. This will help reduce transaction cost marginally, say brokers.
Most of the brokers are concerned that the STT reduction is not carried out across all the categories of turnover as it was generally expected after the overall business on the country's leading stock exchanges declined substantially amid weak market conditions last year.
However, the government refrained itself from making any significant changes in the rates, given that STT has proved to be the most simplest and convenient source of revenue for the government.
STT was introduced in India in 2004-05 in a bid to stem the tax avoidance of capital gains tax.
....more info