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Budget 2023: Stockbrokers' Body Seeks Capital Gains Tax Relief, Higher Dividend Tax Limit

ANMI proposed that income from day trading in listed shares should not be treated as speculative income.

<div class="paragraphs"><p>(Source: <a href="https://unsplash.com/@ashrafali_786">Ashraf Ali</a>/Unsplash)</p></div>
(Source: Ashraf Ali/Unsplash)

The Association of National Exchanges Members of India is seeking exemption of short-term capital gains up to Rs 1 lakh and raising the threshold for tax on dividends.

The ANMI, which represents 900 stockbrokers of national exchanges, met with Nitin Gupta, chairperson of the Central Board of Direct Taxes, to present its recommendations for the upcoming Union Budget.

“For enhanced GDP growth, the government needs to incentivise and encourage equity investment," the ANMI said in a statement.

"Implementing these reforms would have a significant impact on the growth and development of our markets," it said.

In Budget 2023, the association sought:

Industry Status For Brokers

ANMI is seeking 'industry status' for SEBI-registered market intermediaries, in a bid to "remove unwarranted restrictions; cost of funding and raising capital requirements".

This recommendation has no revenue implications and enables ease of doing business, it said.

Reduction In Classification Of Income

The ANMI has recommended that the concept of speculative income should be removed.

Under the Income Tax Act, intraday cash market trading is classified as speculative income. The brokers' body has proposed that income from day trading in listed shares should not be treated as speculative income, but should be classified as business income.

"...This will give a fillip to investors and share brokers to engage wholeheartedly in share transactions," it said.

Tax Exemption In Short-Term Capital Gains

The ANMI has proposed that short-term capital gains be allowed tax exemption up to Rs 1 lakh to improve "participation in market and encourage investment".

STCG are taxed at 15% plus surcharge. Such a gain through listed securities also attracts a Securities Transaction Tax.

Reintroduction Of Rebate

The ANMI has proposed to reintroduce rebate under Section 88E of the Income Tax Act. It also said that "there is a strong case" for complete abolition of Securities Transaction Tax and Commodities Transaction Tax.

"...revenue implication on reintroduction of Section 88E will result in increased volumes and therefore a much larger collection of STT/CTT and in fact, revenue could double due to increased participation in markets."

Rise In Threshold Of TDS On Dividend

The ANMI has suggested to raise the threshold exemption limit for TDS on dividend from Rs 5,000 to Rs 10,000. It further suggested changing the levy from individual recipients to "all residents irrespective of status".

Carry Forward Business Loss

The brokers' body suggested an amendment to set off carry forwarded business loss against any head of income except salary in subsequent years.

Currently, only current-year business loss can be set off against any head except salary, but in case of carry forward business loss, it can be only adjusted against business income.