The latest amendment to Finance Bill 2023 passed by the Lok Sabha today shows that the STT on selling of options has gone up from 0.017% to 0.021%. However, NSE website shows that with effect from June 2016, STT has already been hiked to 0.05%.
This means that traders were already paying STT of Rs 5,000 on sale of options on a turnover of Rs 1 crore. Going by the amendment, STT should now be Rs 2,100 for every Rs 1 crore worth of turnover in the segment.
Taking note of this confusion, the Finance Ministry has said it will soon issue a clarification on STT and that if the tax is already higher, then necessary changes would be made as the intention was to increase the tax and not reduce it. The ministry is also likely to release a backgrounder note on STT soon, ET Now said.
“May be they have indeed cut the rates and the only clarification needed is that they should have said ‘we have cut STT to 0.21% instead of saying hiked to 0.21%’,” fund manager Samir Arora tweeted.
The finance ministry has also hiked STT on sale of futures from 0.01% to 0.0125%. This translates into a 25% hike. In other words, traders will now have to pay STT of Rs 1,250 on Rs 1 crore of turnover while selling futures.
Narinder Wadhwa, President, CPAI said high cost of transactions on equity and commodity trade may lead to drop in volume and liquidity. “Presently, we have very high transaction costs as compared to other foreign jurisdictions by way of CTT, GST, stamp duty, exchange charges, besides levy of applicable capital gain tax/income tax,” he said.
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