As the demands for lowering statutory levy on share trading get the backing of the Securities and Exchange Board of India (Sebi),the finance ministry today held a meeting to discuss the rationalisation of the Securities Transaction Tax (STT). However,the final proposal will be presented only in the Budget 2012-13,an official source said. The idea is to rationalise STT so that the volumes in the capital markets increase without sacrificing revenue, an official said after the meeting,which was attended by representatives of stock exchanges,brokers associations and Sebi. The source said the stock brokers sought removal of the levy,which they claimed was obstructing growth of the equity culture in the country. STT was introduced by Finance Minister P Chidambaram in 2004 to circumvent avoidance of capital gains tax. STT is paid while buying or selling a share and gets added to the price during the transaction. However,one has to pay tax even if there are no gains. The official though ruled out abolition of the levy,said the government would take on board the concerns of the stock-broking community and was open to rationalise STT. Earlier,Sebi chief UK Sinha had said the levy was too high and the regulator would like the government to look into the matter. Former chairman C B Bhave,NSE officials,officials from BSE,MCX-SX and United Stock Exchange had also expressed their opinion to the finance ministry during a meeting in September. For delivery-based transaction in equity and mutual fund units,STT is 0.125 per cent on Rs 1 crore worth trade. While in non delivery trades,the tax is 0.025 per cent. The government will again hold consultation with stakeholders in the first week of November.
