UP still to take action on broker transaction rate

The brokers at the UP Stock Exchange, Kanpur, are feeling let down.

After calling off their strike against the high stamp duty on share transactions imposed by the UP government, they find that despite assurances by top UP officials, the file has not even moved in the last three days.

The strike on Monday was on account of the high stamp duty.

The brokers argued that though the stamp duty is levied in most states, in Gujarat, Maharashtra, and Delhi the rate is Rs 200 for a crore share transactions. But UP has imposed a stamp duty of Rs 5,000 for a crore transactions.

A delegation consisting of the administrator of the exchange, K D Gupta, and two past presidents, Padam Kumar Jain and Sanjay Maheshwari, met the principal secretary and inspector general (stamp and registration), Pritam Singh and Sanjeev Dube, respectively, in Lucknow and told them the duty was high and likely to take business outside UP and trading would then be done through the internet.

Therefore, the level should be brought down to Rs 200. However, officials were not in a position to give any timetable for the withdrawal since this might require an Ordinance, which would need a cabinet meeting.

Giving the background and estimates of revenue which may accrue to the state, Padam Kumar Jain told Business Standard that on a rough reckoning share transactions in a day were estimated at about Rs 40,000 crore and UP has roughly 5 per cent of the share, i.e. Rs 2,000 crore a day.

At Rs 2,000 crore turnover the revenue which will accrue to the state will be roughly Rs 4 crore a day, and this will increase in due course.

Maharahstra wanted the entire tax accruing from share transactions. But this has been denied to it.

Rajashtan too has imposed this duty, but the incidence is the same as that of Mahrashtra and Gujarat.

The notification covers the NSE, the BSE, the UPSE, and even the depositories.

KD Gupta said, "Till the notification is withdrawn we will have to pay at the higher rate. Our request to the government is that some adjustment should be made once the notification has been changed."

But despite assurance the revenue department of UP has not moved much, adding to uncertainty.