NURTURE THE BULL

Capital market players have a long wish list for the government

DEMAND FOR tax sops and incentives for investing in the capital market is a regular feature before every Union Budget. What makes 2022 special, however, is the fact that the penetration of stock markets has increased in a never-before-seen manner with 2021 alone accounting for nearly 17 million new investors. The capital market has a long wish list, which includes, among other things, reduction in classification of income arising from stock market investments for tax computation, reintroduction of rebate against securities transaction tax (STT) and commodities transaction tax (CTT), and certain other tax exemptions. Stakeholders, including the Association of National Exchanges Members of India (ANMI)—the umbrella body of around 900 stock brokers—have highlighted to the government the fact that incomes arising out of stock market transactions have been classified into too many categories causing practical issues for the investors. Market participants have suggested creating three broad categories: Business Income, Long Term Capital Gain and Short Term Capital Gain. They have also requested the government to reintroduce the rebate under Section 88E in lieu of STT and CTT. While a complete abolition of STT and CTT has been a long-standing demand of the capital market, a section of participants believes that the government must at least reintroduce the rebate, which was available till 2008, to avoid double taxation, while also reducing the cost of trading. Among other things, the capital market has sought tax exemptions for senior citizens for dividend income up to `50,000. ANMI says since senior citizens get exemptions for interest income up to `50,000 earned on fixed deposits, a similar exemption should be given on dividend income.