Stock brokers in the country in their wishlist for the Union Budget 2020-21 are seeking restoration of tax exemption on long term capital gains on listed equity shares, shelving off of dividend distribution tax or DDT and rebates in the case of securities transaction tax or STT payment yet again.
As per the Economic Times report, the Association of National Exchanges Members of India (ANMI) also demands a reduction in the STT rate and all of these requirements have been listed in a letter which is addressed to the CBDT, and will form the part of the budget recommendations to the finance ministry.
ANMI is of the view that reintroducing Section 88E under the Income Tax Act and lowering STT rate will trigger an increase in volume and at the same would increase the exchequers revenue stream. In respect of DDT, the broker's body is of the opinion that 15% DDT leads to double or triple taxation of corporate earnings.
"The tax on the dividend should be in the form of equalisation to balance the difference between corporate and highest rate of personal tax. Hence, it is recommended that DTT be withdrawn and the tax be levied at 10% on the recipient and should be deducted by the corporate as TDS," said the letter addressed to the CBDT.
On LTCG tax on listed equity, the body hails that the revenue from the reintroduced tax is marginal, but there is seen a sharp decline in equity investment. Even after 22 months, the midcap as well as small cap index are trading lower by 11% and 31%, respectively. And large caps managed to gain just 7% over the prices as on January 31, 2018, said the report.