SEs to press for STT removal at meeting with FinMin officials
The issue of removal of STT is expected to be raised by representatives of different stock exchanges including BSE, NSE, MCX-SX and USE. The officials of the market regulator Securities and Exchange Board of India (SEBI) will also be present in the meeting.
"We will discuss the policies that can be adopted in order to increase the depth of the stock market, including scrapping of Securities Transaction Tax (STT) or reducing it," a senior Finance Ministry official said.
The government had introduced STT in 2004 on transactions in different types of securities. The rate presently varies from 0.025 percent to 0.25 percent depending upon the type of security traded and transaction -- whether sale or purchase.
The government collects around Rs 7,500 crore per annum from STT and it would be difficult for it to fore go the revenue at a time when efforts are needed to raise revenue and bridge the fiscal deficit, which during the current fiscal is likely to exceed the budget target of 4.6 percent of the Gross Domestic Product (GDP).
The discussions are aimed at providing inputs to the budget for 2012-13 which is likely to be unveiled by Finance Minister Pranab Mukherjee around mid-March.
The Capital Markets division of the Finance Ministry has been pushing for lowering of STT as it would boost investor sentiments.
The stock exchanges, however, are seeking removal of the levy as it would reduce transaction cost, promote equity culture and encourage retail participation.