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MUMBAI : For the upcoming budget in 2023, the Association of National Exchanges Members of India (ANMI) on behalf of its 900 Stock Brokers of national exchanges has presented their recommendations for the upcoming budget to Central Board of Direct Taxes (CBDT) for their consideration.

According to ANMI there are six recommendations that have been sent to the CBDT. These include key recommendations like industry status for Sebi registered market intermediaries, reduction in classification of Income, reintroduction of rebate for STT and CTT.

This comes after ANMI's leadership team met Shri Gupta in Delhi last week to discuss the much needed reforms and its positive impact on the development of the Indian Capital Market.

Kamlesh Shah, President, Association of National Exchanges Members of India (ANMI) 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."

For the overall growth of the capital market, industry status is desired for SEBI registered market intermediaries. This will remove unwarranted restrictions;cost of funding and raising capital requirements for market intermediaries and will help in creating financial services companies of global scale. This recommendation has NIL revenue implications and helps ease of doing business, ANMI said in its three page letter.

In terms of reduction in classification of Income, ANMI stated that the Income Tax Act has too many classifications of incomes arising out of Capital Market transactions. This creates fungibility problems with respect to profits or losses incurred in different types of trades. For example, intraday cash market trading is classified as speculative income but intraday derivative trade is classified as business income.

ANMI suggested to dispense with the treatment of speculative income/loss under section 45 of day trading in listed shares in which no delivery is taken or given and to treat income arising from purchase and sale of shares without delivery as business income. Together with day trading not being treated as speculative (as proposed supra), this will give a fillip to investors and share brokers to engage whole heartedly in share transactions.

Moreover, ANMI also stated that reintroduction of rebate under section 88E and said the revenue implication on reintroduction of Section 88E will result in increased volumes and therefore a much larger collection of Securities Transaction Tax (STT) and /Commodities Transaction Tax and in fact, revenue could double due to increased participation in markets.

Based on its letter, it also stated that since this Short term capital gains (STCG) has also arisen after paying STT, it is desirable that STCG be also allowed a tax exemption up to Rs.1 lakh and that will improve more participation in market and encourage investment.

At present TDS on dividend is not required to be deducted if dividend does not exceed Rs.5000/-. However, this is limited to individual recipient shareholders only.

ANMI recommend that for the sake of better management by investors, this be applied to all Residents irrespective of status and recommended raising the threshold exemption limit from Rs. 5,000/- to Rs.10,000/- from payment of TDS.

ABOUT THE AUTHOR

Priyanka Gawande

Priyanka Gawande is a senior legal correspondent at Mint. She has worked as legal reporter for four years with both television and digital mediums. Based in Mumbai, she reports on disputes across sectors including banking, corporates and finance. This also includes insolvency and bankruptcy cases and intellectual property rights (IPR) litigation. Her focus also comprises tracking capital markets and disputes relating to securities law. Previously, Priyanka worked with Informist Media for 2.5 years covering major insolvency and bankruptcy cases and corporate developments. She started her career in journalism with Business Television India (BTVi) where she reported on primary markets, banking, finance and insurance companies.
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