An appeal to reduce STT.

kkseal · #11 25th December 2006, 08:30 PM

Quote:

Originally Posted by rajib333

A small investor comes here with a view to make some money,but not to make a broker crorepati on his own money and effort. it should be a win-win situation.
after all charges and brokerage , there is little gain
which in turn is cut off by huge STT.

This will only kill the small investors, traders but no effect on big funds or big investors.
In my personal opinion, all should have get the
oppurtunity to make money! not only the biggies
like FII, mutual funds, big investors etc..

Thanking you,
Rajib.

What's stopping the small investor in remaining invested for a little longer than 1-2 days?
I think if the Short Term CGT is abolished it would benefit the small investor a lot more.
The loss to the govt exchequer can be more than compensated by raising the STT for non-delivery trade. STT is also easier & less costly to collect for the govt.

Regards,
Kalyan.

aca_trader · #12 25th December 2006, 08:42 PM

Quote:

Originally Posted by kkseal

What's stopping the small investor in remaining invested for a little longer than 1-2 days?
I think if the Short Term CGT is abolished it would benefit the small investor a lot more.
The loss to the govt exchequer can be more than compensated by raising the STT for non-delivery trade. STT is also easier & less costly to collect for the govt.

Regards,
Kalyan.

Usually such investors who hold positions for not more than 1-2 days will be taxed under section 28 and not 45 of the Income tax Act and it will mean that whethere there is STCGT or not in Income Tax Books, they will pay taxes on their profits. Increasing/decreasing STT would not bother a trader/speculator till the time his profits are three times greater than the amount of STT, thanks to section 80E of Income Tax Act but for others increasing it has adverse impacts.

Further, the counter question is, what is stopping long term investors from paying taxes on profits they earned than putting their burden on the group of liquidity providers who ultimately serve the cause of long-term investors?

Best Regards,
--Ashish

rajib333 · #13 25th December 2006, 10:14 PM

Quote:

Originally Posted by kkseal

What's stopping the small investor in remaining invested for a little longer than 1-2 days?
I think if the Short Term CGT is abolished it would benefit the small investor a lot more.
The loss to the govt exchequer can be more than compensated by raising the STT for non-delivery trade. STT is also easier & less costly to collect for the govt.

Regards,
Kalyan.

Dear Kalyan ,
u please consider my point, we are not against STT.

We will be pleased if we can give some tax to govt. ,
so that we also can tahe a part in the nation-building,
inversely it is our duty also .

Many of us feel that the rate of stt is quite HIGH,
also, in derivative stt can be of fixed charge.

Govt. is giving a tax-rebate on long term investors,
but , many of us cant afford to hold a position so long
as biggies.

How u can justify stt of 2paisa, where brokerage is
just 1paisa?

We the small investors, had to make our own network
and infrastructure, costing heavily on net-connection,
and regular problems with brokers, including cheating
cheating and huge losses for there server break-down.

WHO CARES FOR US? ? ?

Thanking you,
Rajib.

kkseal · #14 25th December 2006, 10:58 PM

Quote:

Originally Posted by aca_trader

Usually such investors who hold positions for not more than 1-2 days will be taxed under section 28 and not 45 of the Income tax Act and it will mean that whethere there is STCGT or not in Income Tax Books, they will pay taxes on their profits. Increasing/decreasing STT would not bother a trader/speculator till the time his profits are three times greater than the amount of STT, thanks to section 80E of Income Tax Act but for others increasing it has adverse impacts.

Further, the counter question is, what is stopping long term investors from paying taxes on profits they earned than putting their burden on the group of liquidity providers who ultimately serve the cause of long-term investors?

Best Regards,
--Ashish

Not a Tax expert but have plentiful sources to check that
out.
For now going by what you say it appears the very short
term/i-day category is getting away with the least Tax
burden anyway. So no harm in bringing in a bit of parity
& fairness And in the process if it cleans up the mkt a
bit - great!

I don't think liquidity will suffer much; maybe a bit in
the short term but eventually more stable mkts will bring
in much larger no. of small investors through the MF
route. Only 3% of India's domestic savings currently flows into the stk mkt This has a potential to go upto 20% This will generate much greater liquidity of a healthier, more stable,long-term variety.

But as i have said earlier this isn't a tax issue alone.
Mkt regulators will have to bring in structural changes.
From what i hear some proposals to this effect is being
considered by SEBI. The tax scenario is also likely to
change after the budget.*

Regards,
Kalyan.

* This by the way is from a highly placed N-Block source

kkseal · #15 25th December 2006, 11:09 PM

It's also my view that STT in cases that lead to double taxation is unfair & unjust. If the govt wants to have STT it should remove all forms of equity related CGTs.

CreditViolet · #16 25th December 2006, 11:33 PM

Quote:

Originally Posted by kkseal

Don't take orders Not yours anyway.

KALYAN

Right..Whatever
You make sweeping generalizations without a hint of proper reasoning.

First of all your definition of volatility is all misplaced. You are talking of dollar volatility in market movements that has nothing to do with curbing intraday trading. Increasing transactions costs only leads to lower liquidity i.e the bid-ask spread increases and nothing more. Speculators whom you are talking about i.e the clueless retail futures trader is not there to buy at 100 and sell at 100.5, they want to sell at 200 with 10 times leverage. The increased transaction costs only causes the jobber/ arbitrageur to step back which in turn leads to less liquid markets where the 'long term' investors finds it harder to execute traders.

Merry Xmas
CV

CreditViolet · #17 26th December 2006, 12:01 AM

Quote:

Originally Posted by rajib333

WHO CARES FOR US? ? ?

Actually Nobody. An Indian Taxpayer pays upto 70% of his total income in direct and indirect taxes.The government cant care less. Bureaucrats and officials pass around papers and things are the same or even worse.

Democracy must be something more than two wolves and a sheep voting on what to have for dinner. – James Bovard

CV

aca_trader · #18 26th December 2006, 12:39 AM

Quote:

Originally Posted by kkseal

Not a Tax expert but have plentiful sources to check that
out.
For now going by what you say it appears the very short
term/i-day category is getting away with the least Tax
burden anyway. So no harm in bringing in a bit of parity
& fairness And in the process if it cleans up the mkt a
bit - great!

Regards,
Kalyan.

Nope, your understanding is not correct. These guys pay @30% while LTCG is free. No doubt, equity is required.

Best Regards,
--Ashish

kkseal · #19 26th December 2006, 02:38 AM

Quote:

Originally Posted by rajib333

... coz the largest poll of trader in india are either speculator or daytrader .

That's the crux of the problem. This won't change voluntarily. It will have to be brought about through fiscal policy & regulation.

Quote:

if we increase the rate of stt, they will be out of the market and causing a less liquid market and less attractive oppurtunity. This in turn may cause to shut down a no. of broker and sub-broker who mainly rely on such kind of investors & trader.

Don't think so People who trade for a living will continue to do so Only they'll have to adapt to the new realities & play for (albeit slightly) longer term which i'm sure they'll do (even while berating the govt all stops out!)

Quote:

also, with the coming of cheap brokers, now stt is more than brokerage,

Brokerage will go down due to competition which is a good thing for traders & investors alike. But then the Tax on an item need not go down commensurately with the dealer's comission.
Generally speaking i'm against high tax rates as it only leads to non-compliance; but STT if used judiciously can be a potent weapon for achieving the broader objective of ushering in greater stability in the mkts and making it cleaner, less littered with filth.

Regards,
Kalyan.

trader111 · #20 26th December 2006, 11:07 AM

Hey Raji, full support to you.

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