Market regulator the Securities and Exchange Board of India (Sebi) today said it is for the government to take a call on Securities Transaction Tax (STT), but pointed out transactions cost are high in Indian capital markets.
Sebi Chairman UK Sinha said: "STT is not an issue for Sebi. This is an issue for the government to decide."
He further said STT was not an issue for Sebi. "This is an issue for the government to decide," he added.
"The total cost in the Indian market for transactions, statutory dues today have a very high percentage. That is what we have seen," Sinha said.
He said the cost of transaction in India was high but Sebi had no direct role in how much STT should be there or not. The Finance Ministry has recently proposed to do away with or dilute STT, a levy that fetches the government around Rs 7,500 crore a year.
The tax, levied on both buyers and sellers in delivery based trades, was introduced in the 2004 Budget and over the years, the rate of this transaction tax has come down from 0.15% levied initially. Currently, a 0.125% tax is levied on both buyers and sellers in case of delivery-based trades.
Marketmen believe reduction in STT would help in improving the market sentiment.
Lower STT would help in higher algorithm trades and hedgers and others who frequently traded in the market, stock brokers said.
"Because of the lacklustre market, profits which come from the market are not able to absorb the STT cost," a stock broker said.
Replying to a question on bringing competition to SME exchanges, Sinha said the National Stock Exchange has been given permission.
The Bombay Stock Exchange had earlier received permission for SME exchange.
