Brokers demand cut in dividend distribution tax in upcoming Budget

It requested the government to reduce STT to be cut from 0.10 per cent at present to 0.05 per cent. The note said that with the reintroduction of LTCG, there is a strong case for reduction of STT. The broking community also requested the government that Section 88E to be restored.
 
The submission said when STT was introduced, no tax concession was available to market players who treated their capital market transactions as business income and they continued to be taxed at the maximum marginal rate of tax. Hence, to make the STT tax regime fair and equitable for those who continued to be taxed at maximum marginal rates, Section 88E was introduced where the STT paid on transactions accounted for as business income was available as a tax rebate with no refund or carried forward provision.
 
However, the rebate was withdrawn later, leading to professional traders in the market being taxed twice, once at STT stage, and then on their incomes at the maximum marginal rate. The submission said this has led to gross discrimination against the trading community who play the crucial role of providing liquidity to the capital markets on account of daily trading activity.
 
The note was silent on withdrawal of long-term capital gains tax (LTCGT) a long pending demand of market players. The LTCG was re-introduced in the February 2018 Union Budget to shore up tax collection and curb the misuse stock exchange platform for evasion of taxes. Accordingly, gains made on selling of equities after more than one year are taxed at 10 per cent.