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0.15 per cent tax to be levied on securities transactions
Our Bureau
Mumbai
,
July 8
THE Finance Minister, Mr P. Chidambaram, abolished the tax on long-term capital gains from securities transactions. Instead, a transaction tax of 0.15 per cent will be levied on securities' transaction on stock exchanges.
Short-term capital gains tax on securities has been reduced to a flat rate of 10 per cent. Earlier, this was being taxed at 30 per cent.
The transaction tax will be levied on the buyer, clarified the Minister.
Thus, for example, an equity market transaction of Rs 1,00,000 will attract a transaction tax of Rs 150 to be paid by the buyer. This is irrespective of what rate the stocks were bought earlier.
As mutual fund units, other than exchange-traded funds, are not transacted through stock exchanges, they do not currently fall under the definition of `securities'. Hence, buying and redemption of mutual fund units will incur 10 per cent and 30 per cent long-term and short-term capital gains respectively. Industry insiders reckon that the definition would be tweaked to include mutual fund units also under the new capital gains tax umbrella.
"Abolition of long-term capital gains and lowering of short-term capital gains should bring more retail investors back into the market," said Mr Srinivasan Varadarajan, Managing Director, Head of Markets, JP Morgan Chase Bank.
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