Unified broking licence regime faces tax hurdle

Duties could deter brokers from integrating commodities and securities arms

Tax implications could deter brokers from opting for a unified licence to operate in the securities and commodities market. 

Currently, most brokerages have separate arms for equities and commodity derivatives trading. Last month, market regulator Securities and Exchange Board of India (Sebi) proposed a single licence for brokers to operate in both these segments. 

The merging of subsidiaries, however, will attract capital gains tax and stamp duty as the underlying assets, including securities and fixed assets, will undergo a change in ownership. 

Transfer of securities held for less than a year into the merged entity will attract short-term capital gains